Preamble

The House met at Half past Two o'Clock

PRAYERS

[Mr. SPEAKER in the Chair]

PRIVATE BUSINESS

CITY OF LONDON (VARIOUS POWERS) BILL

Lords Amendment considered, and agreed to.

TYNE IMPROVEMENT BILL [Lords]

Read the Third time, and passed, without Amendment.

WINCHESTER CORPORATION BILL [Lords]

Read a Second time, and committed.

Oral Answers to Questions — STATUTE LAW COMMITTEE

Sir Edward Keeling: asked the Attorney-General whether he will make a statement about the work of the Statute Law Committee during the past year and its programme for the current year.

The Attorney-General (Sir Lionel Heald): The statement asked for in the Question is necessarily a long one, and,

with the permission of my hon. Friend, I propose to have the answer circulated in the OFFICIAL REPORT.

Sir E. Keeling: I quite agree, but may I ask a supplementary question? Although Parliament would, I think, be willing and anxious to pass even more consolidation Bills if they were presented to it, does my hon. and learned Friend think the progress made is satisfactory considering all the difficulties?

The Attorney-General: I think that the progress can be regarded as satisfactory. I feel I can say a word of appreciation of the work of the Committee having regard to the fact that I attended only my first meeting, so far as I am concerned, the other day.

Following is the statement:

1. As explained in previous statements, the tasks set before the Statute Law Committee fall under two main headings:

(a) that of consolidating scattered enactments, so that the statute law may more easily be found and understood; and
(b) that of reducing the bulk of the published volumes of the statutes and statutory instruments and keeping up to date the necessary indexes to them, and of providing means whereby they may readily be noted up annually.

2. During 1951 the resources available for consolidation were employed largely on the three exceptionally large undertakings mentioned in the statement made on 19th February in that year, relating respectively to Income Tax, to Customs and Excise, and to magistrates' courts.

The Bill relating to the Income Tax Acts was introduced on 6th November, 1951, and


received the Royal Assent on 28th February, 1952. This Bill was among the largest ever presented to Parliament, consisting of 532 Clauses and 25 Schedules. The work done on it was commended by the Chairman of the Committee on Consolidation Bills in terms of unusual warmth.
The Customs and Excise Bill, of 321 Clauses and 12 Schedules, was introduced in this House on 30th January, 1952, and is awaiting re-committal after having been before a Joint Select Committee of both Houses.
The Bill relating to magistrates' courts has been completed and has been favourably reported upon by a Departmental Committee composed of persons expert in this subject. This has been an undertaking on a scale similar to that of the two Bills just mentioned. The Bill consists of 134 Clauses and six Schedules, but it is proposed to deal with a large part of the subject, namely, the whole of the provisions that are distinctively procedural, by Rules under Section 15 of the Justices of the Peace Act, 1949, a draft of which was prepared concurrently with the Bill and submitted with it to the Departmental Committee.
3. In addition, work on 10 other consolidation Measures has been completed or nearly completed. Bills relating to midwives (England and Wales), midwives (Scotland), nurses (Scotland), and dangerous drugs, have been passed. Bills relating to prisons and to costs in criminal cases are now before Parliament. Bills relating to the Port Office, to births and deaths registration and to the registration service in England and Wales, and to prisons in Scotland, are at an advanced stage of preparation and we hope that they may be passed in this Session.
4. Taking account of the Bills mentioned above, 30 consolidation Bills have been passed since the reconstitution of the Statute Law Committee in 1947.
5. The utility of the Procedure Act of 1949 has been further demonstrated during the past year by recourse to it for the purposes of the Magistrates' Courts Bill, of the two Bills now before Parliament, and of the four Bills which are at an advanced stage of preparation.
6. My predecessors have not in previous statements sought to forecast the outcome of future work on consolidation; to promise to deal with particular subjects might interfere with employment of resources to the best advantage as opportunity presents itself. I can, however, give some general indication of what is at present proposed. Progress has already been made with Bills for consolidating the Supreme Court of Judicature Acts, the Food and Drugs Acts, the Savings Bank Acts, and the enactments relating to the Auxiliary Forces; I hope that it will be possible to press on with some at least of these and in particular with the first of them. Consolidations of the Electricity Supply Acts and of the enactments relating to the sale of intoxicating liquors in England and Wales have been urged by the Ministers concerned and are likely to be taken in hand at an early date.
It would be convenient to deal with the Dentists Acts comprehensively as soon as possible after the amending Bill now before this

House is passed; and the Minister of Health has told the Committee that both the members of the professions and administrators would derive much practical advantage from consolidations of the Medical Acts and of the Acts as to nurses which apply to England and Wales. Another subject which we hope to take in hand is that of burial and cremation, where the statute law is in a peculiarly diffuse and ill-ordered state.
We do not propose to embark this year on any undertaking of magnitude comparable with that of the three measures mentioned at the beginning of this statement because we desire to keep resources available in the near future for an overhaul of the Highways Act, which we are not in a position to undertake this year.

7. With regard to the second part of the work entrusted to the Committee the position is as follows:
8. As was mentioned in the statement of 19th February, 1951, the Third Edition of Statutes Revised (containing all the living Public General Acts from the beginning of Parliament to the end of 1948, and all the Church Assembly Measures then in force) was published early in 1951. There was published at the same time a small book which contained simple directions for noting the effect of subsequent legislation in the Edition and in the Annual Volumes of the Statutes for years after 1948; these "Annotations to Acts" are being issued annually, and the latest, for noting the effect of 1951 legislation, was published in March of this year.
9. An edition of the Chronological Table of the Statutes, covering the Acts to the end of 1950, was issued in April, 1951; and a further edition, covering the Acts to the end of 1951, was issued at the beginning of this month. Publication of this work will be annual in future.
10. The Index to the Statutes in Force, which included all Acts to the end of 1950, was issued at the end of last year. The next edition is ready for the printer, but it is considered that its publication in the next month or two would follow too closely on the last previous issue. A further edition indexing the statutes to December, 1952, will be published early in 1953.
11. The issue of the Third Edition of Statutory Rules and Orders and Statutory Instruments Revised is nearly complete. This work comprises 25 volumes, of which 23 have been issued, and the remaining two are expected to be out within the next few weeks. The closing date of the Edition is 31st December, 1948, but its last volume contains various tables, including a Table of Effects giving particulars of amendments, revocations, etc., to 31st December, 1951, which affect both the instruments contained in the Edition and those made between 1949 and 1951. This Table of Effects will be brought up to date and republished annually.
12. The Guide to Government Orders (previously issued under the title "Index to the Statutory Rules and Orders and Statutory Instruments in Force") has been published recently and covers the period up to the end


of 1951. It has been improved by the addition of a table of statutes showing the subject headings under which the powers are noted. This up to date publication, which it is hoped to produce annually in future, is a complete guide to all statutory provisions conferring power to make Statutory Rules and Orders and Statutory Instruments, and to all general Instruments made in exercise of them.
13. A handbook on Subordinate Legislation was prepared in the Statutory Publications Office and published in May, 1951.
14. An edition of the consolidated Index to the Local Acts covering the period from 1801 to 1947 was issued in 1949: work has proceeded throughout the year with the preparation of a further edition.
15. The Statute Law Committee have made special efforts to secure that all their publications are produced as early as possible after the close of the periods to which they relate. The 1951 Volume of Public General Acts was published in March and the annual Index to the Local Acts in mid-February. Everything possible is being done to facilitate publication of the 1951 volumes of Statutory Instruments and it is hoped that they will be available not later than August: last year the 1950 volumes were published early in September.
16. Work in the Statutory Publications Office is now so organised as to ensure that whenever a new edition of Statutes Revised or of Statutory Rules and Orders and Statutory Instruments Revised is required it can be put forward for printing at short notice.

Oral Answers to Questions — CONSERVATIVE CHRISTIAN LEAGUE

Mr. Driberg: asked the Attorney-General if he will bring to the attention of the Director of Public Prosecutions the activities of Mr. G. de Courtenay, General Secretary of the Conservative Christian League, 61, Seaview Road, Drayton, Portsmouth, who has set up, without authority or permit, a registry through which he purports to be able to supply agricultural workers, hotel employees and domestic servants, and has issued leaflets, bearing no imprint, inviting subscriptions from prospective employers and gifts from supporters of the political object of the League.

The Attorney-General: I will refer this case to the Director of Public Prosecutions. I shall be obliged for any information which the hon. Member can give me about it.

Sir W. Smithers: Would my hon. and learned Friend also call the attention of the Public Prosecutor to the activities of the Dean of Canterbury?

Oral Answers to Questions — HUMAN RIGHTS (UNITED NATIONS COVENANTS)

Mr. Shepherd: asked the Secretary of State for Foreign Affairs the policy of Her Majesty's Government towards the United Nations Covenants on Human Rights now in the course of formulation.

The Minister of State (Mr. Selwyn Lloyd): It is the policy of Her Majesty's Government to continue to advocate a Covenant on Civil Rights with precise obligations. With regard to economic and social rights, Her Majesty's Government continue to maintain that these do not lend themselves to embodiment in a precisely drafted international instrument. Nevertheless, their policy is to continue with the majority of nations represented in trying to prepare a Covenant which may serve some useful purpose.

Mr. Shepherd: Is my right hon. and learned Friend aware that some concern is felt in the United States of America that there is undue desire to drag feet on these proposals? Would he assure the House that it is not part of the intention of Her Majesty's Government?

Mr. Lloyd: Any such suggestion is precisely contrary to the facts. So far as the first category of human rights is concerned, we were indeed the pioneers in the matter and have every intention of doing our best to procure such a precise Covenant. As regards the other matters, we still adhere to the view that some of the principles are so vague that it is very difficult to bring them to terms of precise definition; but we are seeking to collaborate with other nations to see if anything can be done to procure a useful Covenant.

Oral Answers to Questions — KOREA

Truce Talks

Mrs. Castle: asked the Secretary of State for Foreign Affairs whether he is yet in a position to make a fuller statement on the progress of truce talks in Korea.

Mr. Selwyn Lloyd: The armistice delegates are continuing to meet in plenary session, but no progress has been made since my right hon. Friend's statement of 7th May.

Mrs. Castle: Can the right hon. and learned Gentleman tell the House whether the only outstanding difficulty is the question of the exchange of prisoners of war? If so, does he not think it is extremely serious that the possibility of peace in Korea should be held up by a matter on which there is so much confusion? Will he give a full report?

Mr. Lloyd: According to my information it is correct that that is the matter that is holding up the conclusion of an armistice at the present time. With regard to that matter, I do not think I can do better than to read the words of my right hon. Friend that
The United Nations Command will, as always, be ready to carry on the meetings with the Communist negotiators and ready to continue the search for acceptable terms for an armistice; but it must be clearly understood that the United Nations Command will not agree to force prisoners of war to be repatriated against their will."—[OFFICIAL REPORT, 7th May, 1952; Vol. 500, c. 388.]
That was an expression of opinion with which the right hon. Gentleman the Leader of the Opposition agreed at the time.

Mr. Shinwell: Can the right hon. and learned Gentleman say whether we are consulted in these armistice talks? Are we represented in the discussions? To what extent are we made acquainted with what is going on?

Mr. Lloyd: It is correct that we are acquainted, and we are informed of what is going on. In fact, I think the machinery of consultation is very much the same as when the right hon. Gentleman was in office.

Mr. Shinwell: Surely some progress is being made in these discussions. Is it not desirable that we should be represented in the discussions by somebody on the spot?

Mr. Lloyd: That is a quite different matter from the one which is on the Order Paper, and if the right hon. Gentleman will be good enough to put it down as a Question I shall consider what answer could be given.

Mrs. Castle: If the difficulty arises from the fact that a large number of prisoners of war are so passionately anti-Communist that they do not want to be repatriated, why are they still prisoners of war?

Mr. Lloyd: If the United Nations Command were to release these people I think there would be even greater difficulties.

Prisoners of War (Repatriation)

Mrs. Castle: asked the Secretary of State for Foreign Affairs whether he will send British representatives to Korea to interview the prisoners of war in United Nations camps in order to report to Her Majesty's Government on the extent to which, and the reasons why, prisoners are refusing repatriation.

Mr. Selwyn Lloyd: As my right hon. Friend said in his statement on 7th May, the United Nations are willing that an international body or joint national Red Cross teams, accompanied by observers from both sides, should conduct a further census after an armistice. I therefore see no reason to propose interrogation by British representatives.

Mrs. Castle: is not the right hon. and learned Gentleman aware that what I am asking is that we should ourselves satisfy ourselves that the reasons why these prisoners do not want to be repatriated are sound reasons, and that the House ought to be satisfied of that in view of the fact that the dragging on of the conflict in Korea is endangering world peace?

Mr. Lloyd: My right hon. Friend the Foreign Secretary dealt with this matter in the statement which he made on 7th May, when he stated:
In view of the scrupulous fairness of their interrogation, and of the offer … for subsequent re-checking by independent bodies with Communist observers present … the United Nations Command has had no alternative but to resist forced repatriation."—[OFFICIAL REPORT, 7th May, 1952; Vol. 500, c. 387.]
To that expression of opinion Her Majesty's Government adhere.

Mr. A. Henderson: Have the United Nations authorities finally made up their minds that they will not in any circumstances agree to this international body, with Chinese observers, interviewing these prisoners before the armistice and not after the armistice? Might that not break the impasse which at present exists over this one point?

Mr. Lloyd: That is another question, which I would much rather see upon the Order Paper.

Colonel Gomme-Duncan: Would my right hon. and learned Friend not agree that the prisoners themselves are the best judges of whether these reasons are genuine or not?

Mr. Mayhew: Does the right hon. and learned Gentleman agree that, contrary to that last supplementary question, the point is whether they can return safely, not whether or not they object to doing so?

Mr. S. Silverman: Does the right hon. and learned Gentleman remember that, since the Foreign Secretary made his statement there has been published the report of the Red Cross Commission of Inquiry into the proceedings at the prisoner of war camp; that from that report it emerges clearly, beyond controversy, that it is admitted that the interrogation of prisoners took place in the early morning before dawn, with the camp surrounded by machine guns, and with armed forces entering the camp and forcibly separating the prisoners into small groups for interrogation; and does this not throw the most sinister light upon the assertion that the interrogation was fair, and that this was the voluntary decision of the prisoners themselves?

Mr. Lloyd: I want to make it perfectly clear to the House that Her Majesty's Government do not accept as facts the matters to which the hon. Gentleman has just referred.

Mr. Silverman: It is not contested.

Mr. Lloyd: This matter is raised in a later Question put down by the hon. Member for Maldon (Mr. Driberg), and I will answer it then if I may.

Mr. Donnelly: asked the Secretary of State for Foreign Affairs whether, in view of British adherence to the 1949 Geneva Convention on prisoners of war, he will instruct Her Majesty's Government's representatives at the United Nations to ensure that the terms of this convention are applied in the Korean war.

Mr. Selwyn Lloyd: So far as the United Nations Command are concerned, they have been applying the 1949 Convention. So far as the Communists are concerned, there is, unfortunately, no way of compelling them to carry out its provisions. Her Majesty's Government therefore do not consider that any useful purpose would he served by such instructions.

Mr. Donnelly: Is it not a fact that part of this Convention relates to the return of prisoners of war? While no one on this side of the House wishes in any way to detract from our liberal tradition of extending asylum to genuine political refugees, is it not a fact that this country is in an extremely awkward position in this situation because of its signature to this Convention; and is the right hon. and learned Gentleman trying to have it both ways?

Mr. Lloyd: I do not admit that this country is in a difficult position at all, or that there is any question of trying to have it both ways. Her Majesty's Government's interpretation of the relevant part of this Convention is that it cannot be read as involving an obligation forcibly to repatriate prisoners of war who freely object to this, as long as their objection is, in effect, an appeal for political asylum rather than attempting to evade their military responsibility.

Sir T. Moore: In any case, why should we force back men who fight for freedom into slavery, if not to death?

Mr. M. Stewart: In view of our signature to this Convention, ought not the British Government to know, of its own knowledge, through its own representatives, what the wishes of these prisoners are?

Mr. Lloyd: I have already dealt with that matter. We are satisfied with the. assurances we have received as to the fairness in which this interrogation was carried out.

Mr. S. Silverman: On a point of order. In replying to a previous supplementary question relating partly to the same subject matter as this Question, the right hon. and learned Gentleman said that he would await the Question which has just been asked—[HON. MEMBERS: "No."]—in order to deal with a certain supplementary question that I asked. As he has not dealt with it, may I be permitted to ask it, otherwise the Minister will be encouraged to withhold from and deceive the House on important matters on which he has promised to inform us?

Mr. Speaker: I do not think that is a point of order for me at all. It is impossible for me to guarantee in every case that the answer given by a Minister satisfies his interrogator.

Prison Camp (Inquiry)

Mr. Driberg: asked the Secretary of State for Foreign Affairs if he will make inquiries of the United Nations Command in Korea concerning recent changes in the command of a camp in which a number of Chinese and North Koreans are held as prisoners of war, and the incidents that led to these changes; and if he will make a statement.

Mr. Selwyn Lloyd: The United Nations Commander has ordered an inquiry into recent events on Koje Island. I should prefer not to say anything until the results of this inquiry are known.

Mr. Driberg: Is it not very strange that there should be these riots and mutinies against their American captors among prisoners, such a large proportion of whom are said to be strongly pro-American and pro-United Nations and anxious to stay in the camp, or on this side anyway? Cannot the right hon. and learned Gentleman take this as a reason for asking permission to send a British delegation to investigate conditions there?

Mr. Lloyd: All I can say in answer to this question is that at the moment it would be very much better to await the result of the inquiry into the recent events; for example, my information is that the majority of the prisoners concerned are violently pro-Communist.

Mr. Donnelly: Is it not a fact that the allegation made in the question of the hon. Member for Nelson and Colne (Mr. S. Silverman), which was repudiated a minute or so ago by the right hon. and learned Gentleman, was based on a statement by the United States Government; and what is he doing, in this fashion, by repudiating American statements?

Mr. Lloyd: I am not repudiating anything. I am simply saying: let us see what is the result of this court of inquiry; and I gave an example that my present information showed a difference, that most of the prisoners in these camps are Communists and not anti-Communists.

Mr. Beswick: Will not the Minister have great difficulty in reconciling the statement which he has just made, that the majority are violently pro-Communist, with the figures which his right hon. Friend gave last week to the effect that the majority were anti-Communist?

Mr. Lloyd: I am dealing now solely with Koje Island.

Mr. Beswick: Does the right hon. and learned Gentleman not understand that a large proportion of the total number of prisoners are pro-Communist?

Mr. S. Silverman: Does not the right hon. and learned Gentleman realise that there is a very serious discrepancy between the statement he has made to the House and the statement made by the United States authorities to the Red Cross Commission, to which I referred in my previous supplementary question? All the statements which I set out in that question were derived, not from Communist sources but from facts admitted by the United States military authorities in the course of that inquiry to the Red Cross Commission, and if these facts are correct, how can it still be continued to be argued that the men concerned were not subjected to very great pressure or that their choice was a voluntary choice?

Mr. Lloyd: If I have given a false impression to the hon. Member for Uxbridge (Mr. Beswick), may I point out that I did refer, in answer to a supplementary question, to Koje Island. There are various camps on Koje Island. and this question refers to a specific camp. It is with regard to this specific camp that our information is that the majority of prisoners are pro-Communist. In the light of the supplementary question of the hon. Member for Nelson and Colne (Mr. S. Silverman), I still say that I think it better that we should not pursue this matter until the facts are established by the court of inquiry

Mr. Mayhew: While accepting what the Minister has said in interpreting his reply, in view of the unsatisfactory nature of the Government's general attitude on this question of prisoners of war. I beg to give notice that I shall raise it on the Adjournment.

War Criminals

Mr.Emrys Hughes: asked the Secretary of State for Foreign Affairs what steps have been taken to prosecute war criminals in Korea.

Mr. Selwyn Lloyd: None, Sir.

Mr. Hughes: Is it the view of Her Majesty's Government that there have been no war crimes?

Mr. Lloyd: That question might very well be addressed to other quarters.

Mr. Paget: Have we not heard enough of this silliness?

Oral Answers to Questions — MISSING DIPLOMATS

Sir H. Williams: asked the Secretary of State for Foreign Affairs whether Mr. Guy Burgess and Mr. Donald Maclean have now been struck off the Foreign Office staff.

The Joint Under-Secretary of State for Foreign Affairs (Mr. Anthony Nutting): The two officers concerned have now been absent without leave for nearly a year and action is being taken as a routine disciplinary measure for the termination of their appointments.

Oral Answers to Questions — AMBASSADORS AND MINISTERS (STATUS)

Sir H. Williams: asked the Secretary of State for Foreign Affairs the present difference in status between a British ambassador and a British minister in foreign countries.

Mr. Nutting: A British ambassador and a British minister abroad enjoy substantially the same privileges and immunities and have the same powers, but an ambassador has a higher precedence than a minister among his diplomatic colleagues.

Sir H. Williams: Having regard to the fact that there are now more ambassadors than ministers, would it not be a good idea to make them all ambassadors and bring an end to what is now becoming a complete farce?

Mr. Nutting: That matter does not lie entirely within the responsibility of the British Government but, as my hon. Friend will appreciate, is a matter for agreement between ourselves and any States concerned who wish the status of their missions in this country to be raised.

Oral Answers to Questions — FISHING DISPUTE, ICELAND

Mr. Hoy: asked the Secretary of State for Foreign Afftirs if he has yet received a reply from the Government of Iceland regarding the extension of Icelandic territorial waters; and if he will make a statement.

Mr. Selwyn Lloyd: The Icelandic Government's reply was handed to Her Majesty's Minister at Reyjavik on 12th May, and the full text was received in London on 15th. I am placing a copy in the Library, together with a copy of an aide mémoire which Her Majesty's Minister received at the same time as the Note.
In this Note the Icelandic Government have declined to amend their fishery regulations as we had previously requested. Her Majesty's Government naturally regret that this is so. I should prefer not to comment further at this stage. The complex questions involved have to be fully considered in the light of the reply just received.

Mr. Hoy: Is the right hon. and learned Gentleman aware that, following on the action of Norway the action by the Icelandic Government strikes a very serious blow indeed at the British fishing industry; and could he not, even at this stage, be a little more forthcoming about what action the Government will take with Iceland over this matter, lest it may be an encouragement to other people to do the same thing?

Mr. Lloyd: I quite agree that the effect of the decision in the Norwegian fisheries case was a very serious one for this country. I equally agree that the decision of the Icelandic Government is almost equally serious. Her Majesty's Government did make very strong verbal and written representations to the Icelandic Government not to take this course, and we shall certainly seek to preserve the rights of our people in any legitimate manner. What we are now considering is the best method of achieving that object.

Mr. T. Williams: Do we take it from that reply that the Government will pursue negotiations with the Icelandic Government; and have they in mind the possibility that if the Icelanders insist upon their present-day policy they may


very shortly find a complicated question at the docks where perhaps their fish will not be landed in future?

Mr. Lloyd: That matter has already been very forcibly drawn to the attention of the Icelandic authorities. This was a matter in which we sought to arrive at some arrangement by agreement. Unfortunately, the Icelandic Government have taken this unilateral attitude, and at all times we have pointed out to them the consequences of that action. However, we are examining urgently what can be done to preserve the interests of the people of this country.

Commander Maitland: Does my right hon. and learned Friend also agree that the circumstances in Iceland are quite different from what they were in Norway; and will he impress that point upon the Icelandic Government?

Mr. Lloyd: That has already been done. The decision in the Norwegian case related to the drawing of base lines, and the question of the right to extend territorial waters by extending their limit was not in doubt in that case. It is quite different from the Icelandic case, and that has been made clear to the Icelandic Government.

Oral Answers to Questions — GENOCIDE CONVENTION (RATIFICATION)

Mr. Janner: asked the Secretary of State for Foreign Affairs whether he will now ratify the Genocide Convention.

Brigadier Medlicott: asked the Secretary of State for Foreign Affairs if Her Majesty's Government will now ratify the Genocide Convention.

Mr. Selwyn Lloyd: Her Majesty's Government have continued to give careful study to this matter which is complicated by the fact that, as I am advised, the obligations which we should assume by accession would require that our domestic law should be brought into accord therewith. This would, in other words, involve the introduction of legislation. I will undertake, however, to do my best to secure a decision in the matter as soon as possible.

Mr. Janner: Would the right hon. and learned Gentleman bear in mind that this

question was first raised by myself in 1950, and that the last occasion on which I raised it was on 30th January? There have been as many as 36 ratifications or accessions to this particular Convention, and an assurance was given, in these exact words, on 30th January by the Foreign Secretary that:
His Majesty's Government hope shortly to reach a decision on this question."—[OFFICIAL REPORT, 30th January, 1952; Vol. 495, c. 169.]
Will he do his best to see that a favourable decision is arrived at, and will he use his utmost endeavours to see that we are not, in consequence of our delay, placed in a very awkward position, to say the least of it, in relation to other people who have acceded to the Convention?

Mr. Lloyd: I cannot accept the hon. Gentleman's suggestion that we are placed in an awkward position because of our delay in this matter. I should have thought that the record of this country in these matters was such as to absolve us from any criticism. So far as accession is concerned, there are complicated legal matters involved because we do not believe in acceding to a convention unless we believe we can comply meticulously with its provisions, and that is a matter which has caused delay to my predecessor and myself.

Mr. Janner: Will the right hon. and learned Gentleman take into consideration that this matter has been considered by the International Court and that they have given a decision on the matter in which reservations could be applied? It looks very bad when we, who were a party to the original Convention itself, are not now prepared to ratify it.

Oral Answers to Questions — GERMANY

Contractual Agreement

Mr. Emrys Hughes: asked the Secretary of State for Foreign Affairs what proposals were made to the British High Commissioner by the Federal German Chancellor, Dr. Adenauer, on the subject of bringing into force before ratification of parts of the Contractual Agreement made by the signatory powers; and what was the reply of Her Majesty's Government.

Mr. Selwyn Lloyd: None, Sir.

Mr. Hughes: Are we to understand that the statement made by the foreign correspondent of the "Manchester Guardian" on 15th March was inaccurate?

Mr. Lloyd: If there was any suggestion that the Federal German Chancellor had made any representation with regard to bringing into force before ratification parts of the Contractual Agreement made by the signatory Powers, and if that was what the correspondent said, then he was wrong.

Allied Car Patrols

Sir D. Savory: asked the Secretary of State for Foreign Affairs on what grounds the Helmstedt autobahn, connecting Berlin with Western Germany, was closed on 13th May to all Allied military car patrols; and what reply has been received to the protest by the British commander in Berlin addressed to the Soviet Commander-in-Chief, General Chuikov.

Mr. Selwyn Lloyd: The reasons for the recent incidents are still not clear. However, according to my latest information the position on the autobahn is now normal.

Sir D. Savory: Will not the right hon. and learned Gentleman point out that the clear understanding which was come to after the air blockade was that our patrols should be allowed free access to the autobahn for the protection of motorists and for helping those who have broken down?

Mr. Lloyd: I think that the position at the moment is satisfactory and that we had much better leave it there.

Oral Answers to Questions — TRIESTE (ZONE A ADMINISTRATION)

Sir D. Savory: asked the Secretary of State for Foreign Affairs what reply has been sent to the protest of Marshal Tito against the arrangement made between Her Majesty's Government and that of the United States of America and the Government of Italy regarding the administration in Zone A of the free territory of Trieste.

Mr. Selwyn Lloyd: No reply has yet been sent. Her Majesty's Government are consulting the United States Govern-

ment, with whom they are jointly responsible under the Italian Treaty of Peace for the administration of Zone A, as to the terms of the reply.

Sir D. Savory: When the right hon. and learned Gentleman sends his reply will he call the attention of Marshal Tito to the fact that, whereas he has absolute control over Zone B, we are allowing the Italians to have only a more modified control over Zone A? Is it not also relevant to point out to Marshal Tito that we are entitled to ask him what protection he is giving to the rights and privileges of the Italian population in Zone B?

Mr. Lloyd: I can assure my hon. Friend that while the reply is being prepared all relevant considerations will be borne in mind.

Mr. Ernest Davies: Will the right hon. and learned Gentleman agree that whereas, according to the peace treaty, Yugoslavia is in occupation of Zone B, in the case of Zone A the Italians are not parties to the occupation? Is not one of the reasons for the protest that the Italian Government itself has been brought in? Although no one objects to the Italians in Trieste participating in the administration, is not trouble caused by the association of the Italian Government with the administration?

Mr. Lloyd: It is very difficult to debate the matter by question and answer. The Yugoslav Note will be carefully considered and a reply will be made in due course, and a more appropriate occasion on which to debate the matter will be when the reply has been sent.

Oral Answers to Questions — GRIMSBY TRAWLER (NORWEGIAN SENTENCE)

Sir D. Savory: asked the Secretary of State for Foreign Affairs what protest has been made to the Norwegian Government against the sentence under which the Grimsby trawler "Royal Marine" was ordered to pay a fine and damages amounting to 163,500 kroner for allegedly fishing in Norwegian waters.

Mr. Selwyn Lloyd: I understand that the owners of the trawler "Royal Marine" intend to appeal to a higher court against this sentence, in accordance with the Norwegian law. The matter is,


therefore, still sub judice; and the question of intervention by Her Majesty's Government does not at present arise.

Sir D. Savory: In view of this extensive claim, would it not be relevant to ask Her Majesty's Government if they would draw a line from, say, Yarmouth to Peterhead and say that the waters within that line are our territorial waters and that we will not allow any foreign fishermen to take our fish?

Mr. Lloyd: As I understand the case, it is alleged that the trawler was guilty of infringing the recent decision of the International Court. That matter is being tried in the Norwegian courts, and there is an appeal pending. The other matters to which my hon. Friend referred do not really arise.

Oral Answers to Questions — LOCUST PLAGUE, MIDDLE EAST

Mr. Chetwynd: asked the Secretary of State for Foreign Affairs what assistance has been given to combat the locust plague in the Middle East.

Mr. Selwyn Lloyd: Her Majesty's Government are assisting, through the operations of the Desert Locust Control Organisation in Nairobi, in combating the locusts in their breeding areas, which stretch from Ethiopia and Somalia, through Arabia, to the Persian Gulf. The Entomological Adviser to the British Middle East Office is also at present assisting the Jordan Government in organising control measures to meet the present invasion, and the Royal Air Force have flown insecticide and equipment into Jordan.
In addition, the Food and Agriculture Organisation of the United Nations, and the Governments of the United States, Pakistan, India, Soviet Russia, Italy and Turkey are sending or have promised equipment, supplies and technical help to Middle East countries to meet the present emergency.

Mr. Chetwynd: Can the right hon. and learned Gentleman say whether this excellent co-operation between all the countries concerned is having any appreciable affect upon the plague? Is the plague under control?

Mr. Lloyd: It is too early to say that.

Mr. Hastings: Can the right hon. and learned Gentleman say how many aeroplanes are co-operating in this useful work?

Mr. Lloyd: I should require notice of that question.

Oral Answers to Questions — WEAPONS OF MASS DESTRUCTION

Mr. Sorensen: asked the Secretary of State for Foreign Affairs what proposals have been submitted to the United Nation's Disarmament Commission by Her Majesty's Government for the examination of measures that would be required for the effective collective abolition of bacteriological, radiological and chemical warfare.

Mr. Selwyn Lloyd: No proposals limited to the matters referred to in the Question have been made to the Disarmament Commission. In accordance with the resolution of the General Assembly, establishing it, the Commission has addressed itself in the first place to the question of disclosure and verification. Its plan of work also provides for examining measures to eliminate weapons of mass destruction; but this stage of the Commission's work has still to be reached.

Mr. Sorensen: As these modern weapons will have to be considered by the Disarmament Commission, is it not necessary for us to have some constructive proposals for consideration by the Commission?

Mr. Lloyd: My own feeling is that it is not a constructive approach to segregate certain weapons or methods of warfare. If only we can lay the foundations for a more general agreement, I believe that the other matters will fall into their proper places. I am not denying the importance of dealing with them at the appropriate time.

Mr. Noel-Baker: Since we have repeatedly committed ourselves in principle to the abolition of these forms of warfare, ought there not now to be the same kind of expert study of bacteriological, radiological and chemical warfare as has so effectively been carried out in the United States in the case of atomic warfare?

Mr. Lloyd: I shall certainly bear that in mind. I cannot, without notice, say


whether such an examination has taken place already or not. It is certainly not taking place in the work of the Disarmament Commission.

Mr. Noel-Baker: Surely the right hon. and learned Gentleman recognises that if we are invited to participate in the efforts of the Disarmament Commission towards the abolition of these weapons we should now be studying the measures which will be required to prevent their preparation and to ensure that the prohibition is effective.

Mr. Lloyd: I will be frank with the right hon. Gentleman. I believe that these matters are very much easier to deal with than some of the others and that until we get a basis with regard to the more difficult ones with which we have to deal I am not sure that we are well advised to pursue these matters. I repeat that I do not think it wise to treat certain forms of warfare in isolation.

Mr. Sorensen: Do I understand the right hon. and learned Gentleman to say that he feels that all weapons which are recognised to be weapons of mass destruction must be put in the same category as conventional weapons, and that there is really no difference in their effect or their significance?

Mr. Lloyd: I mean exactly that. I believe that all methods of waging war, provided they are on a sufficient scale, are equally repulsive. I believe that it is a mistake to try to isolate certain methods of waging war from others. When we get agreement we hope to limit conventional armaments and to abolish these weapons of mass destruction.

Oral Answers to Questions — MINISTRY OF FOOD

Preserves (Fruit Content)

Captain Duncan: asked the Minister of Food whether he will implement the recent recommendations of the Food Standards Committee on the minimum fruit content of certain jams and marmalade.

The Minister of Food (Major Lloyd George): The Committee's final recommendations have now been received and I hope to be in a position to make a statement shortly.

Captain Duncan: How shortly? As the Committee made its recommendations months ago, has there not been ample time for representations to be made and for my right hon. and gallant Friend to consider them?

Major Lloyd George: No, Sir. A preliminary report was made at the end of April and all interested parties were given until 10th May to make their protests. Those representations have been studied by the Committee, and the final report has only just been sent to me.

Mr. Snow: Is the right hon. and gallant Gentleman aware that there is acute anxiety among soft fruit growers, such as the Essex strawberry growers, that they will not be able to dispose of their crops again this year? They do not understand, nor do I, why the proposed minima for fruit inclusion in jam should be so low.

Meat

Commander Donaldson: asked the Minister of Food if he is aware that retail butchers are being subjected to increasing inconvenience by late deliveries of carcass meat; and if he will take steps to ensure that carcass meat is delivered the day before sale to the public, especially at week-ends and local half-closing days.

Major Lloyd George: I am not aware of any general complaint by butchers about late deliveries of meat, and we do try to make deliveries on Thursdays for the week-end trade. If my hon. and gallant Friend will send me details of any cases which have come to his notice I will gladly investigate them.

Mr. W. T. Williams: asked the Minister of Food in view of the fact that large supplies of frozen meat are to be shipped in the next few months from Eire to the United States of America and in view of the failure of the Argentine Government to reach its contract figure for meat to the United Kingdom, what action is being taken by Her Majesty's Government to ensure that all available supplies of meat from sources such as Eire are made available for this country.

Major Lloyd George: Argentina is fulfilling its contractual obligations this year. Under the Anglo-Irish Trade Agreement, 1948, which entitles us to 90 per cent. of all live cattle exported, we buy at prices closely linked to those paid


to farmers in the United Kingdom. Since the Agreement was made imports of cattle and beef have increased over sevenfold.

Foot-and-Mouth Disease (Slaughter Policy)

Mr. Hamilton: asked the Minister of Food how much extra meat is now available to his Department as a direct result of the slaughter policy consequent on the widespread outbreak of foot-and-mouth disease; and what will be the resultant increase in the domestic meat ration.

Major Lloyd George: None, Sir. The extra meat resulting from the slaughter of livestock which has been in contact with infected animals is outweighed by the temporary hold up in normal slaughterings caused by the restrictions on the movement of livestock.

Mr. Hamilton: Is it not the case that meat which would normally come here from New Zealand is being diverted to Canada and that foot-and-mouth infected meat from Canada, which the United States will not eat, is being sent here?

Major Lloyd George: The hon. Gentleman is quite wrong. No infected meat is being sent here from Canada or anywhere else. The diversion of meat from New Zealand to Canada is to help Canada out of a difficulty. We are getting non-infected prime meat from Canada in return.

Mr. Hamilton: Why is meat from Canada now being refused by the United States?

Major Lloyd George: The United States has a totally different rule from the one we have here. In this country we use for ordinary feeding purposes areas which are not infected, but when there is an infection in Canada, no matter where it is, the whole of the Canadian border is closed to the United States. The only meat we are getting is from a non-infected area.

Staff Redundancy, Fife

Mr. Hamilton: asked the Minister of Food how many single women and widows have been declared redundant at the Thornton Food Office, Fife, in the past six months; and on what basis was the selection of these women made.

Major Lloyd George: Three women clerks, two single and one widow, have been declared redundant. Owing to resignations, however, only one person is now under notice of discharge. Under the Redundancy Agreement negotiated on the Departmental Whitley Council, clerks are discharged on the principle of "last in, first out."

Mr. Hamilton: Can the Minister say how many married women are still employed in this office, and whether, as a result of dismissals over the last six months, any overtime is being worked in this office?

Major Lloyd George: I Could not answer the second part of that Question without notice, but I think there are 19 married women in the office.

Livestock Branch, High Wycombe

Colonel J. H. Harrison: asked; he Minister of Food how many officials are employed in the livestock branch at High Wycombe.

Major Lloyd George: There are 38 staff in the area meat and livestock office at High Wycombe, of whom six are employed in the livestock branch.

Colonel Harrison: Is my right hon. and gallant Friend aware that there is a growing opinion among farmers, auctioneers, and butchers that these officials are, to put it mildly, not as conciliatory and as helpful to responsible tradesmen as might be desired, and that they are not always carrying out their functions as the Minister might like? Will he look into the matter?

Major Lloyd George: I have no information which would lead me to form any opinion of that sort, but if my hon. and gallant Friend has any complaints I shall be glad to look into them if he will let me have them.

Slaughterhouse, Wickham Market

Colonel J. H. Harrison: asked the Minister of Food why no cattle arrived at Mr. Clark's slaughterhouse, Wickham Market, Suffolk, on 12th May; and why Mr. Clark received no notification they were not coming, after having his slaughterhouse used the previous week.

Major Lloyd George: Mr. Clark's premises and services were used as a temporary arrangement on 5th, 6th and 7th May, but as the restrictions on the movements of livestock in the district were removed on 4th May Mr. Clark was told on 5th May that his premises and services would not he required after Wednesday, 7th May.

Colonel Harrison: Is my right hon. and gallant Friend aware that this constituent of mine spent over £700 on this slaughterhouse on the instructions of the Ministry of Food; that this was the first time he was to receive any animals, and that he had no notification at all that he was not going to get them on the 12th? I visited his premises when he was expecting them, and in common courtesy he might have been told that they were not coming. Will my right hon. and gallant Friend consider opening more small slaughterhouses so that people in East Suffolk will get a better supply of meat?

Major Lloyd George: My information is not the same as my hon. and gallant Friend's, because Mr. Clark in a telephone conversation with our headquarters, said that he fully understood that his services would not be required after 7th May.

Cooking Fat

Mr. Janner: asked the Minister of Food whether he is aware that much of the cooking fat supplied to housewives in the shops is quite unusable for frying: and what action he is taking to see that the quality is improved.

Major Lloyd George: No, Sir. My information is that the lard and cooking fat supplied against the domestic ration are entirely suitable for use in frying, but if the hon. Member will let me have details of any specific complaints I will be glad to have them investigated.

Sir W. Smithers: Is my right hon. and gallant Friend aware that if his Ministry ceased to be the sole buyer of raw materials for fat such as seed, and returned seed and oil buying to the Baltic Exchange and other private enterprises he would get more and better quality fat? Has the Minister acknowledged his assent to that?

Mr. Speaker: The hon. Gentleman seems to be conveying information rather than asking for it.

Pigs

Mr. Nabarro: asked the Minister of Food the reason for the increased national pig population of 50 per cent. between 1949 and the end of 1951 compared with a decline of backyard pig slaughtering of 50 per cent. between 1949 and 1951; and what steps he is taking to restore parity and equity to backyard pigs.

Major Lloyd George: The first part of the Question is a matter for my right hon. and gallant Friend the Minister of Agriculture.
Regarding the second part, many small producers now sell their pigs to the Ministry instead of getting slaughtering licences for home consumption, but I shall be happy to consider any suggestion my hon. Friend can let me have to give them further encouragement.

Mr. Nabarro: Is my right hon. and gallant Friend aware that some weeks ago he said that he was considering the restrictions and controls operated by his Department which affected the slaughter of backyard pigs? Can he now say whether he can lighten these controls and encourage these small producers?

Major Lloyd George: I think my hon. Friend will remember that I also said that the governing factor in this question was the supply of feedingstuffs. Very much greater supplies of feedingstuffs will be needed before we can do what my hon. Friend suggests.

Mr. J. Paton: What restores parity and equity to backyard pigs?

Oral Answers to Questions — ROADS

Crossing, Monkton (Removal)

Sir T. Moore: asked the Minister of Transport whether he is aware that the only road crossing in the village of Monkton, Ayrshire, has been removed, and that, as a result, disquiet exists in the village regarding the safety of the children; and what steps he proposes to take to remedy this complaint.

The Parliamentary Secretary to the Ministry of Transport (Mr. Gurney Braithwaite): In my opinion the right solution here is not an uncontrolled pedestrian crossing, but the provision of an adult patrol to see the children safely across the road.

Sir T. Moore: But that means a police-Exchange and other private enterprises, man. Where is adult control to be found? Here is a crossing that gets the children to the only tuckshop in the village and there is a rapid growth of traffic across the road. Is my hon. Friend aware that that is the one place where accidents are bound to happen?

Mr. Braithwaite: I can only refer my hon. and gallant Friend to my previous answer on this subject.

Mr. Woodburn: Is the Minister aware that many educational authorities use old age pensioners' services for this work and are finding them quite satisfactory?

Mr. Braithwaite: That is quite correct, and this particular crossing was removed on the recommendation of the Ayr county council.

Sir T. Moore: No, that is not true; they agreed.

Southwark Bridge (Repair)

Mr. Gough: asked the Minister of Transport what steps are being taken to repair the bomb damage at the north end of Southwark bridge; and whether he is aware that a bottleneck exists at this point.

Mr. Braithwaite: I understand that the Corporation of the City of London are preparing a scheme for the reconstruction of the northern approach. In view of present economic conditions, my right hon. Friend cannot commit himself to approving this scheme.

Mr. Gough: Would my hon. Friend bear in mind that this obstruction has existed since the end of the war? It consists of two Bailey bridges and only 20 yards away there is a tram terminus where, at busy hours, there is a seething mass of pedestrians and general danger to life and limb. Would he consider these as matters of serious import?

Mr. Braithwaite: I think we should await the scheme before pronouncing upon it.

Oral Answers to Questions — RAILWAY SUPERANNUITANTS

Mr. Erroll: asked the Minister of Transport if he will make a statement on the action he proposes to take as a result of representations made to him to increase the pensions of railway superannuitants.

Captain Ryder: asked the Minister of Transport whether he has now considered the position of railway super-annuitants arising out of seriously decreased value of their pensions; and whether he will make a statement.

The Minister of Transport(Mr. Alan Lennox-Boyd): I am sorry that I cannot as yet add to the reply my hon. Friend gave to the hon. and gallant Member for Merton and Morden (Captain Ryder) on 31st March last.

Mr. Erroll: Can the Minister say with what energy he is pursuing a solution?

Mr. Lennox-Boyd: With the usual energy that I hope I always display.

Captain Ryder: Will my right hon. Friend bear in mind that this is a very pressing matter; that the value of these pensions has gone down very considerably, and that great hardship is being felt?

Mr. Lennox-Boyd: I fully realise that the best contribution that anybody can make to these and other pensions is to bring down the cost of living.

Mr. A. Edward Davies: The right hon. Gentleman is suggesting a course which we all welcome but which offers no immediate solution to this problem. Will he tell us how soon he hopes to be able to give a decision on the matter, which his predecessor said he was considering the last time he replied to a similar Question?

Mr. Lennox-Boyd: I hope it will be possible in the not too far distant future to make an announcement upon the subject, but very many difficulties arise. There is, for instance, the difficulty of linking railway pension rates to National Insurance rates, and these are all complicated matters. I repeat that the best help for these pensioners is to do what the Government are now doing, to lay the economic foundations upon which our recovery depends.

Mr. Bottomley: Is it the intention of the Minister of Transport to authorise the Commission to reduce fares as one way of reducing the cost of living?

Mr. Manuel: Can the Minister say whether the decision he makes will apply to the superannuation payments of all retired railwaymen?

Mr. Lennox-Boyd: I will look into that.

Oral Answers to Questions — OIL POLLUTION, THE SOLENT

Air Commodore Harvey: asked the Minister of Transport what steps he is taking to deal with oil pollution in the Solent.

Mr. Braithwaite: I would refer my hon. and gallant Friend to the answer which I gave to my hon. Friend the Member for Portsmouth, South (Sir J. Lucas), and my hon. Friend the Member for the Isle of Wight (Sir P. Macdonald) on 12th May and also to my reply to the debate on the Adjournment on 16th May.

Air Commodore Harvey: In the meantime, has my hon. Friend issued any instructions on this important matter direct to the oil companies?

Mr. Braithwaite: Perhaps my hon. and gallant Friend will read my reply in last Friday's debate.

Oral Answers to Questions — KENNET AND AVON CANAL (CLOSED SECTION)

Mr. Hurd: asked the Minister of Transport what action he is taking within his powers under the Railway and Canal Traffic Act, 1888, to safeguard the interests of the users of the Kennet and Avon Canal, of which the Reading to Newbury section is still closed to traffic.

Mr. Braithwaite: The British Transport Commission, on whom responsibility rests for the upkeep of this waterway, inform us that, following the reconstruction and repair of some of the locks, it has been re-opened as far as Midgham Lock, about 14 miles from the junction with the Thames at Reading. The necessary work beyond this point is presenting difficulties, but when the reconstruction of Colthrop Tumbling Bay is completed it should be possible for traffic to proceed as far as Newbury.

Mr. Hurd: As this part of the canal has been closed to traffic for a long time, will my hon. Friend give the facilities that the inland waterway authorities want to finish the work, so that they can get it done effectively now?

Mr. Braithwaite: indicated assent.

Mr. Mikardo: Is the hon. Gentleman aware that the information he has given will be greatly welcomed in the district?

Is he also aware that it is good to see the Transport Commission doing something under its obligations to put into use these waterways, which were allowed to become derelict before the Commission was set up?

Mr. Hurd: Is my hon. Friend not aware that the canal has been closed for two years?

Oral Answers to Questions — STATE ASSETS (MINISTERS' SPEECHES)

Mr. Ernest Davies: asked the Prime Minister if he will direct all Members of Her Majesty's Government to refrain from making statements depreciating the value of publicly-owned assets prior to the introduction of legislation for their disposal, to the consequent advantage of potential purchasers.

The Prime Minister (Mr. Winston Churchill): Her Majesty's present Ministers should not be deterred from calling attention to economic facts, however unpalatable. Such conduct is very different from deliberate attempts to depreciate the value of publicly-owned assets before sale by threats of confiscation should they be renationalised by some later Parliament. I hope I may assume that the hon. Member put the Question on the Paper as an indirect means of conveying his advice to the right hon. Gentleman the Member for Lewisham, South (Mr. H. Morrison).

Mr. Davies: Sometimes the Prime Minister's assumptions are not correct. Would he not agree that it is the duty of Her Majesty's Ministers to assist the State to obtain the best possible price for public assets when they are put up for sale, and that speeches such as that made by the Parliamentary Secretary to the Ministry of Transport on 13th March to the Road Haulage Association aim at reducing the value of those assets when they will be sold? Is he further aware that the Parliamentary Secretary said that it did not seem to him that there would be much paid for the road haulage undertakings because, in the short time of nationalisation—[HON. MEMBERS: "Speech."]—the goodwill had been dissipated to the four winds?

The Prime Minister: My answer covered all those aspects of the matter. I will leave the hon. Gentleman to deal with his right hon. Friend.

Mr. Davies: That is another assumption on the part of the Prime Minister which is wrong. Will he be good enough to answer my question, and give instructions that as long as there are nationalised assets which are the property of the State he will not permit his Ministers to make speeches which would cause the value of the assets to decline and public money to be wasted?

Mr. H. Morrison: Would the Prime Minister not agree that when the Parliamentary Secretary is addressing the Road Haulage Association we should make allowances for the fact that he is addressing his master's voice?

Oral Answers to Questions — ATOM WEAPON TESTS, AUSTRALIA

Mr. Emrys Hughes: asked the Prime Minister to what extent American observers will be allowed to witness the atom bomb tests in Australia, in view of the presence of British observers at the atomic experiments at Bikini; and to what extent arrangements have been made to exchange reports of atom bomb experiments with the United States Government.

The Prime Minister: No arrangements have been made for American observers to witness the test of the United Kingdom atomic weapon. The United States Government is prevented by existing domestic legislation from exchanging reports on atomic weapons with other countries. I should, of course, be very willing to consider any proposals which the United States Government might make for closer collaboration in the future.

Mr. Hughes: Is the Prime Minister satisfied that sufficient security precautions are being taken to prevent a leakage of these secrets to America? Does he not think, in view of the fact that America has so many atom bombs, that it is a waste of good money to do this in this half-hearted way without coordinated relations with the United States?

The Prime Minister: That point has no connection with the Question on the Order Paper.

Oral Answers to Questions — U.S. BASES, EAST ANGLIA

Mr. A. Henderson: asked the Prime Minister whether Her Majesty's Government intend to continue the Anglo-American bases in East Anglia, in view of the fact that their presence renders this country specially liable for the counter attention of the other side.

The Prime Minister: As I stated in the House on 21st November, 1951, certain bases and facilities in the United Kingdom were made available by the late Government to the United States Air Force for the common defence of the United Kingdom and the other countries who are parties to the North Atlantic Treaty. This arrangement will continue so long as it is needed in the general interest of world peace and security.

Mr. Henderson: In view of the Prime Minister's reply, can he say why he persistently reiterates that the responsibility for establishing these bases rests upon the late Government, while, in the same context, drawing attention to the additional dangers involved in the retention of these air bases? Is the Prime Minister not aware of the risk of increasing alarm and despondency in order to score a cheap party point off the Opposition?

The Prime Minister: I have repeatedly said that we supported the late Government in the decision which they took, and we shall certainly stand by our share of the risks. It is only when the Opposition appear to show signs of total irresponsibility in regard to these matters that it is sometimes necessary to remind them of the serious position of the country.

Mr. J. Paton: Is the Prime Minister aware that the people of East Anglia would be very glad to see the last of these arrangements?

The Prime Minister: That is a view which is held by an important section of the Opposition below the Gangway, but it is not the policy which the Labour Government pursued in office nor, I believe, is it the policy which its responsible Members will pursue even though they are now in opposition.

Mr. Noel-Baker: In other words, may we assume that the Prime Minister fully supports the policy of the late Government in building up collective security by


the exchange of defence requirements as the basic method of preventing war and thereby ensuring the safety of all peoples?

The Prime Minister: That is all very nicely put, and I do not dissent from anything in it. At the same time, I think people should face facts, and that is all I have assisted them to do.

Major Legge-Bourke: Will the Prime Minister bear in mind that the right hon. and learned Gentleman who put down the Question himself went to one of these aerodromes and welcomed the bombers?

Mr. A. Henderson: Is not the Prime Minister fully aware that I did not put down the Question because I have changed my view, but because I thought he has unnecessarily reproached the late Government for doing something of which he approved?

The Prime Minister: I assure the right hon. and learned Gentleman that I did not mean to reproach. I meant to inculculate upon the Opposition the feeling that they also have a continuing responsibility.

Oral Answers to Questions — HOUSE OF COMMONS (CATERING)

Mr. Chapman: asked the hon. Member for Woolwich, West, as Chairman of the Kitchen Committee, why, apart from one or two main dishes, the à la carte menu served in the Strangers' Dining Room is so monotonous.

Mr. Steward: On each day last week, Members and their guests taking meals in the Strangers' dining rooms, had a choice of 4 fish dishes, 5 to 6 entrees (all of which varied daily) and 5 items from the cold table. In addition, there were dishes to order consisting of 11 fish items, 7 entrees and 13 omelettes and savouries. However, I will see what can be done to vary the items on the "To Order" side of the menu.

Mr. Chapman: Is the hon. Gentleman aware that one can repeat almost off by heart the list on the menu on the right-hand page, because it does not vary from

day to day, and that after sitting here looking at the faces of hon. Members opposite for a few hours we need a little variety in the Dining Room?

Mr. Steward: The à la carte menu in every first-class catering establishment in London is not varied daily. There is only a limited number of dishes, and we can only put on what we can get.

Lieut.- Colonel Bromley - Davenport: What proportion of the cost of the dishes is met by the taxpayer?

Mr. Steward: I should like to have notice of that question.

Oral Answers to Questions — TRANSPORT COMMISSION (ANNUAL REPORT)

Mr. D. Jones: asked the Minister of Transport when the 1951 annual report of the British Transport Commission will be available for consideration by hon. Members.

Mr. Lennox-Boyd: The Commission hope that the report will be available in the early part of July.

Mr. Jones: Is it not a fact that the majority of the important figures relating to this Report are already in the hands of the right hon. Gentleman's Department? Is he holding them back for reasons of policy?

Mr. Lennox-Boyd: Certainly not. The usual practice in cases of this kind is to wait until the Commission has reported.

Lieut.-Colonel Lipton: Is the holding back of this Report retarding a decision by the Minister in connection with the promised reduction of fares in the London area?

Mr. Lennox-Boyd: Certainly not. We hope that the Report can be published this year and that it will be available sooner than it has ever been published before.

Mr. Ernest Davies: Would it not be possible to publish a summary of the results before the full Report is out, which is the practice followed by large public companies?

CIVIL LIST

Message from The Queen

The Chancellor of the Exchequer (Mr. R. A. Butler): (at the Bar) acquainted the House that he had a Message from Her Majesty The Queen to this House signed by Her Majesty's own hand, and he presented the same to the House, and it was read by Mr. SPEAKER (all the Members of the House being uncovered), as follows:

Buckingham Palace.

ELIZABETH, R.

The demise of the Crown renders it necessary that renewed provision shall be made for the Civil List.

Her Majesty places unreservedly at the disposal of the House of Commons those hereditary revenues which were so placed by Her Predecessor, and has commanded that the Papers necessary for a full consideration of the subject shall be laid before the House.

Her Majesty desires that provision shall be made for His Royal Highness the Duke of Edinburgh, and for Her Majesty's children other than His Royal Highness the Duke of Cornwall. Her Majesty also desires that provision shall be made for Her Royal Highness the Princess Margaret in the event of Her marrying and for any future wife of His

Royal Highness the Duke of Cornwall in the event of her surviving His Royal Highness.

It is Her Majesty's intention, during the minority of His Royal Highness the Duke of Cornwall, to provide for His Royal Highness from the revenues of the Duchy of Cornwall and to assent to arrangements for applying the balance of those revenues, during the minority of His Royal Highness, in relief of the charge for Her Majesty's Civil List.

In the event of the revenues of the Duchy of Cornwall vesting in Her Majesty, it is Her Majesty's intention, in so far as those revenues are sufficient, to provide for Her Majesty's Civil List out of those revenues.

Her Majesty recommends the consideration of these several matters to Her faithful Commons, and relies on their attachment to Her person and family to adopt such measures as may be suitable for the occasion.

May 16th, 1952.

The Lord Privy Seal (Mr. Harry Crookshank): Sir, I have to inform the House that my right hon. Friend the Chancellor of the Exchequer will move a Motion at the beginning of business tomorrow for the appointment of a Select Committee to consider Her Majesty's Message.

Orders of the Day — FINANCE BILL

Considered in Committee [Progress, 13th May].

[Colonel Sir CHARLES MACANDREW in the Chair]

Clause 10.—(CHARGE OF INCOME TAX FOR 1952–53.)

3.34 p.m.

Captain J. A. L. Duncan: I beg to move, in page 13, line 9, to leave out "and sixpence."
I could make my entire speech on this Amendment in the words recorded in the OFFICIAL REPORT from the speeches of my hon. and right hon. Friends on the Front Bench during the last Parliament. I shall not do that because I do not wish to make too long a speech, but I am sure that if I had done so I should not have embarrassed them because, even if the Government cannot do anything this year, they will agree in the main with what I shall say.
National expenditure is so large now that in the interests of all classes of the community it is essential that it should be reduced. Some 40 per cent. of the total national income is being raised by taxation. Of the total of £4,500 million, £1,800 million, according to the Budget estimates in the White Paper, is being raised by Income Tax, which is over one-third of the total amount raised in the Budget. This is a very high proportion of the national income to be taken from the pockets of the taxpayers every year.

Mr. Sydney Silverman: Can the hon. and gallant Gentle-say how much it would cost to accept his Amendment?

Captain Duncan: If the hon. Gentleman will have a little patience, I will deal with that point, but I do not want to detain the Committee too long. A reduction in the standard rate would affect every Income Tax payer. It must not be thought that this Amendment would have an effect only on those who pay the standard rate. It would affect also those who pay the reduced rate, because the corollary of a reduction in the standard rate would be that there would be a reduction in the rates for those who pay the reduced rates: so that it would benefit

every Income Tax payer in the country. That is part of my intention, although I admit that in this Amendment I cannot cover that point.

Mr. Eric Fletcher: Will the hon. and gallant Gentleman say whether he really means that? If so, presumably he would have put down the necessary consequential Amendments to carry that into effect.

Captain Duncan: I have explained that, although I have not done so, it is part of the scheme that would result if this Amendment were accepted.

Mr. Roy Jenkins: Mr. Roy Jenkins (Birmingham, Stechford) rose—

Captain Duncan: I am sorry I cannot give way again. The high rate of Income Tax has four main effects. First, it is a disincentive to hard work. My right hon. Friend the Chancellor of the Exchequer has done a good deal to help overtime amongst those who are earning £1,000 a year and less, but there are others in this country: lawyers, business men, professional men, civil servants—the brain workers of this country. Those people, I submit, deserve just as much consideration as anybody else if this country is to survive as a business and trading nation. It will he within the experience of everyone who is in touch with lawyers, doctors, dentists, professional men and people in business generally that the present high rate of taxation is making people think that, as they have to work for so many months for the Government, when they have made that amount they will not put in extra effort to work a little longer.
Secondly, it is a disincentive to saving. During the last two years there has been a reduction in national savings, that is to say, more has been taken out than has been put in. Take the year 1951. To 31st March, 1951, there was a loss of £90 million. In the year to the end of March, 1952, there was a loss of £85 million in national savings. I submit that the very high rate of taxation for those who pay Surtax as well makes it virtually impossible for them to save at all and, taking a long view, I submit that that is not in the interests of the country.
The third disincentive, in my submission, is to risk capital. It seems to me that what we face in the future is a tremendous shortage of risk capital for


industry, and we have to provide from savings, which is the only way in which it can be provided, the money to be made available for new enterprises, new development, new inventions, and so on.
I have deliberately not quoted anybody so far, but at this stage I feel I must quote the former Economic Secretary to the Treasury who said, in a speech which he made on 6th June last year:
I want also to ask the Committee to consider what will be the effect of taxation of this kind upon people who would have been inclined to take a risk in developing a new enterprise, or, if they did not want to run one of their own, to take a bit of a risk in providing equity capital for industry rather than fixed obligation capital. If we are at a rate at which they are paying something like three-quarters of any additional income in taxation, what does it mean if they are considering whether they will take a risk? The country's interest really requires that if there is an opportunity for progress where the chances of profit are, let us say, double the risk of loss, that opportunity clearly ought to be seized, but in these circumstances it will not be seized if the prospects of profits are doubled or even trebled; they require to be fourfold. In those circumstances, we cannot expect that this country will hold its way in a changing world and in competition with other countries."—[OFFICIAL REPORT, 6th June, 1951; Vol. 488, c. 1104.]
I submit that that is the case. We shall have, as we are bound to have in the next few years, enormous demands on industry for new capital, which will be inevitable if we are to keep in the van of progress and to maintain our position in this changing world. If we are to do that, we must make money available through the savings of the people. We must do this in a form which will encourage people to risk their money in developing new enterprises and new inventions.
Lastly—and here I believe many economists will not agree with me, but I do not pretend to deal in economics—I believe that this high rate of taxation is inflationary. The very fact that such a high rate of taxation has to be deducted from, let us say, company profits is bound to have the effect of increasing the price of the goods which are sold. It seems to me that if we are to be able to compete in the world as exporters in the future, we must keep our prices down so that we can sell our goods at competitive prices.
I conclude with two extracts from speeches by the Chancellor of the Exchequer, because I am sure he will agree with what I have been saying. First of all, speaking on 30th April in the debate on the Petrol Tax, my right hon. Friend said:
I hope that I am a healthy Chancellor of the Exchequer when I say I regard all taxation as bad. There are only different degrees of evil in the incidence of any particular levy. This particular tax"—
that is, the Petrol Tax—
has the advantage of being … thinly spread and widely borne."—[OFFICIAL REPORT, 30th April, 1952; Vol. 499, c. 1539.]
In my submission, Income Tax is widely borne but it is not so thinly spread and it has, therefore, a bigger handicap than the Petrol Tax.
My second quotation is from "The Times" of 5th May, reporting a speech which my right hon. Friend made in his own constituency, or at any rate in Essex. He said:
If the Government plans for keeping down expenditure are successful, as we hope they will be, given time, then taxes can be reduced and savings will increase, and this in turn will mean that the Government will need a smaller surplus. We must break the vicious circle of high taxation leading to low savings which themselves require more taxation. … 
I have moved the Amendment for all those reasons, and although I do not expect to get very much change from my right hon. Friend this year, I rely on the Government to do something for the general body of taxpayers next year.

Mr. E. Fletcher: Before the hon. and gallant Gentleman sits down, will he answer, as he promised, the question put by my hon. Friend the Member for Nelson and Colne (Mr. S. Silverman)—how much would this proposal cost?

Captain Duncan: I apologise. I failed to do so only because I did not want to take up too much time. It will cost about £88 million in a full year.

3.45 p.m.

Mr. S. Silverman: I do not think the Committee need be greatly surprised that some such proposal as this has come from the opposite benches in the course of our discussions in Committee on the Finance Bill. While I need not conceal from the hon. and gallant Member for Angus, South (Captain Duncan), that I do not agree with a word he said, nevertheless


I think I can concede that he put his proposal before the Committee with considerable moderation of language and restraint.
I wish I could share that restraint, but I am afraid I cannot, because it seems to me that the proposal which he has made in the present national circumstances is about as callous and cynical and brutal a proposal as I have heard in all the years I have been a Member of the House. What does the proposal do? He proposes to take from the Chancellor of the Exchequer £88 million, and he proposes to give it to precisely that class of taxpayers which demonstrably needs it least.

Captain Duncan: No.

Mr. Silverman: Let us examine it.

Mr. Niall Macpherson: It is their own money.

Mr. Silverman: It is one's own money that is spent in all kinds of expenditure, whether it is spent on the butcher or the baker or in taxation. It is one's own money which one disperses to the tax collector in just the same way.

Mr. R. Jennings: Mr. R. Jennings (Sheffield, Hallam) rose—

Mr. Silverman: I cannot give way yet. It is nothing to the purpose to say that it is a man's own money. All taxation is that. I do not know that I differ very greatly from the economists of old who said that all taxation was robbery. Of course, if the State is taking money which belongs to an individual and using it for purposes of which the individual who supplies the money may or may not approve, that question is bound to be raised. If he does not approve, he does not like paying the money—and sometimes if he does approve he does not like paying it either. But we cannot run a modern society without taxation. That is obvious.
What we are concerned with is a proposal to use the present national crisis—and the Government are never tired of telling us about it—as the occasion for reducing the national revenue by £88 million in a full year and giving that amount to precisely that class of taxpayer which, as things now stand, is best off. That is the proposal which the Committee is being asked to consider.
Look at the situation. We have just very substantially reduced the food subsidies. I am not arguing now whether that was a good or bad thing to do, but nobody denies that it has raised the cost of living very considerably precisely among those sections of the population who live in the main on rationed, subsidised foods. There is not an old age pensioner in the country who is not making a very substantial inequitable contribution to the alleged financial needs of the country because of the withdrawal of the food susidies.
I know that it is sometimes argued, "Oh, we are giving it back; we are only taking it out of one pocket and putting it into another." The people who use that argument always forget that the pockets out of which they are taking the money do not belong to the same people as the pockets into which they are paying a compensating payment. They are taking money from the poorest and giving it, in the main, to the richest.
I dare say that the hon. and gallant Member does not like explaining to old age pensioners in his constituency why they have to pay so much for their bacon, cheese, butter, tea and bread. Let him go and explain, at the same time as he explains that, that he wants to give something to the richest people in the constituency, those who pay the full rate of Income Tax. One has to have a very substantial income nowadays before paying the full rate of Income Tax. In those circumstances, when the old age pensioner is being called upon to cut down his food in order to make his contribution, it is proposed to give a substantial sum of money every year to the people who have already been benefited.

Mr. Peter Roberts: I hope the hon. Member will not continue this line of argument. This reduction of Income Tax would not take money from one person's pocket and give it to another. The hon. Member will remember that there is a surplus of £500 million in my right hon. Friend's Budget. I do not think the hon. Member is being fair to the Committee when he deals with the question of old age pensioners, and says they cannot be assisted by this Amendment. We are talking about putting more money in the hands of people, and I suggest that it should come from the Budget surplus.

Mr. Silverman: If the hon. Member will take the trouble to think two steps at a time—two very short steps—he will see how irrelevant is his intervention. I am not suggesting for the moment that there is anything in the proposal of the hon. and gallant Member for Angus, South, to take £88 million from the Chancellor of the Exchequer and give it back to the taxpayer, which necessarily in itself would be taking it from someone else's pockets. That is so obvious that it is hardly necessary to make the point.

Mr. Roberts: I did so to save time.

Mr. Silverman: If the hon. Member wants to save time, he would do better not to interrupt. The point, as I am sure he realises and had realised before he interrupted but which he hoped I had not seen—not a very great compliment—is that these people have been called upon to bear these sacrifices, and not have them made up to them in some other way, on the plea that the Chancellor needs to retain undisturbed and unaffected his present surplus.

Mr. Roberts: indicated dissent.

Mr. Silverman: The hon. Member shakes his head. I am tempted to remind him of a learned friend in court who, seeing his learned friend shaking his head, reminded the court that when his learned friend was shaking his head, there was really nothing in it. It is no good the hon. Member shaking his head about it. The fact is that we have heard the Financial Secretary to the Treasury and the Chancellor of the Exchequer time after time during recent debates explaining that it is quite a false point to ask the Chancellor to give up this, or that, or to do this, that or the other because of his surplus, for the reason that he needs to retain every penny of that surplus.

Mr. Roberts: indicated dissent.

Mr. Silverman: If the hon. Member still dissents, may I ask whether he still thinks that it is not necessary to retain the surplus?

Mr. Roberts: I hope that if I catch your eye, Sir Charles, I may argue that point.

Mr. Silverman: May we take it, without waiting for the argument, that what the hon. Member is saying is that it is

not necessary for the Chancellor to retain this surplus?

Mr. Roberts: indicated assent.

Mr. Silverman: Correct? Well the mover of the Amendment has a worse case than I thought he had. He is now saying that the Chancellor of the Exchequer is retaining hundreds of millions of pounds in the Revenue which he does not need and that some part of it ought to be taken. He does not say it should be given to the old-age pensioner, or in reduction of the price of food, or in various reliefs from Purchase Tax on textiles, for instance—which would mean a very great immediate alleviation, although no doubt not a permanent cure, of the slump in the textile market—or used for the purpose of the various proposals made so far and which will be made before we reach the end of the Committee stage. All of these will be resisted on the ground that the surplus must be retained.
Hon. Members opposite believe that the surplus must not be retained, but the only proposal they have on the Order Paper for giving back any part of it is to give the payer of the full rate of Income Tax a relief which is denied to every other section of the community. — [HON. MEMBERS: "No."] That is the situation. The hon. Member for Heeley (Mr. P. Roberts) has interrupted me twice in order to explain that very point. I could not believe it; I did not believe it. I did not base my argument on that to begin with, but I am forced to accept it from the hon. Member now that their view is that it is not necessary for the Exchequer to retain all this money.
Look at what could be done with it. There is very much that could be done to make life easier for millions of fellow citizens suffering through the financial policy of the Government today and who would be entitled to have relief very greatly in priority to those who pay Income Tax at the full rate.
It is characteristic of hon. Members opposite that in thinking on these subjects their first thoughts go to the man who pays Income Tax at the full rate and their thoughts, having gone there, stop there. They have not time to think of other people whose needs are much greater. It is this which has always made the Conservative Party what the Prime Minister called them so long ago, the party of the rich against the poor.

Mr. P. Roberts: I am very glad to have this opportunity of replying to the hon. Member for Nelson and Colne (Mr. S. Silverman). Some of his argument I did not follow, with most of it I did not agree, and I particularly disliked the suggestion of impure motives. I hope that by the time I have finished my intervention, he will have a different idea about that.
I believe that this Amendment is vital to our economy at the present time for the reason that we must stimulate demand. I think that is now necessary. We have had arguments in this Committee earlier about the textile trade, about shoes and clothing and the falling off in demand. I believe we have now come to the position when relief of Purchase Tax is not a stimulation of demand. The Front Bench explained at length that 75 per cent. of textiles have no Purchase Tax on them and that it is a lack of demand which is keeping people from the shops. Therefore, I believe that by a direct reduction in taxation we may try to stimulate this demand.
This I also think is a Liberal principle and those of us who are Members of the Liberal-Conservative group—[Interruption.] I am very proud to be a member of a group which has Liberal and Conservative support—think we are fully entitled to press this point of view in the Committee. Why do I believe this argument to be unanswerable? There has been a definite change in the financial atmosphere of the country. In the last six years there was a lusty demand which was created by the need for capital expenditure after the war; there was a lusty demand created by increased commodity prices, by the building up of homes and by the gratuities paid to soldiers when they returned. There was a lusty demand created by capital and Government expenditure over the last six years. All that was inflation.
4.0 p.m.
When I sat on the benches opposite I listened to speech after speech by Socialist Chancellors of the Exchequer. One which impressed me most was by the right hon. Member for Leeds, South (Mr. Gaitskell), when he was talking about the Budget surplus. His whole argument was that the Budget surplus was something which must be creamed off in order to reduce demand. That was a disinflationary

activity. Nevertheless, because of other factors of Socialist extravagance—their Government expenditure and overspending of the national purse—we ran into the financial crisis of 1951, and the present Chancellor of the Exchequer was consequently faced with a picture of serious inflation.
We know that two consequences can flow from that. One is a state of national bankruptcy such as occurred in Germany after the 1914–18 war. The other, if that is avoided, is a return to a falling-off in demand, and what we used to call industrial depression. We can congratulate the Government on the steps they have taken to avoid the first alternative of national bankruptcy. Has not their brave and courageous attitude in cutting down imports and raising the Bank rate had the result of warding off that alternative?

Mr. S. Silverman: What was brave about raising the Bank rate?

Mr. Roberts: It was an unpopular thing to do, and it was twisted by hon. and right hon. Gentlemen opposite in order to try to gain political advantage.
I do not believe that we can escape the other alternative of six years of Socialism, that is, the depression which is now coming upon us.

Mr. Frederick Mulley: Before the hon. Member leaves the point about lack of demand, will he equate what he has just said with the Chancellor's request to the trade unions for wage restraint? Surely that is the opposite of what the hon. Member is saying.

Mr. Roberts: I am coming to that point. There are two ways of stimulating demand. The first is, as the hon. Member for Sheffield, Park (Mr. Mulley) has just said, by increasing wages. But increasing wages without increased production is in itself inflationary. [Interruption.] If I can put my argument I am sure that hon. Members will eventually agree with me. The alternative is to reduce direct taxation.

Mr. Silverman: Why is that not inflationary?

Mr. Roberts: If the hon. Member will allow me to develop my argument, I hope that I shall be able to convince him.
The Government have taken three steps, all of which are deflationary and which are having the result of slowing down demand. That is the basis of the argument which I wish to pose. We cannot avoid the depression which, by their policies over the last four or five years, hon. and right hon. Gentlemen opposite are bringing upon the country.

Mr. Silverman: Before the hon. Member leaves that part—

Mr. Roberts: I will give way when I have finished this section of my argument. I have been interrupted so much that I am having difficulty in putting the argument consecutively. The argument which I am putting forward is that as a result, for instance, of the very high prices of wool more than a year ago the finished article now in the shops is too highly priced for people to buy—the high price of the wool now being reflected in the price of the finished article in the shop. One can follow that process in the case of timber, fuel and many other commodities.
As a result we are now finding what must always happen when there is inflation. I am surprised that hon. Members opposite cannot see the point. In an inflation all prices rise and eventually become too high for the man and woman in the street to be able to buy what he or she wants. I am suggesting that we have avoided national bankruptcy but are still faced with the second alternative of shop prices being too high for people to be able to buy the goods. When in office hon. Members admitted this principle when talking about Marshall Aid. They said that without Marshall Aid at a certain time there would have been two million unemployed, for the same reason as I am putting to the Committee.
I have now, I hope, made clear the argument I am trying to advance, that we are avoiding the national bankruptcy alternative but are facing the rising price and depression alternative, and that we have to take steps to try to avoid that.

Mr. Silverman: I thank the hon. Member for giving way in the exposition of what I agree with him is a difficult argument. What I cannot follow about his argument is this: he says that if we try, by raising workers' wages, to increase

their ability to buy goods in the shops which at present are priced beyond their reach, that would be inflationary because they would be getting increased purchasing power without any additional goods. I follow that part of his argument. Why is it not doing exactly the same thing if we increase the purchasing power of another section of the population by reducing the amount which that section pays in taxation? Is not that equally increasing the purchasing power of those people without increasing the amount of goods available?

Mr. Roberts: I had assumed that the hon. Member had listened carefully to the speech of my hon. Friend, who showed that one of the main arguments which we are trying to put forward concerns increased incentive and increased productivity. In fact, the whole object of the Amendment is based on increased production. I thought that the most important part of the Budget speech was when the Chancellor explained that he was relying on increased production in order to maintain the balance of his Budget. I am trying to argue that unless we get that increased production, unless we get things flowing again, my right hon. Friend will not be able to achieve his Budget aim.

Mr. Silverman: Mr. Silverman rose—

Mr. Roberts: I really must get on.
There are all sorts of alternatives available to deal with this problem. The hon. Member for Nelson and Colne (Mr. S. Silverman) has put forward one suggestion. I am putting forward another suggestion which I hope is in order on this Clause.

Mr. Silverman: What is the answer to the point I put?

Sir Herbert Williams: Leave the hon. Member alone.

Mr. Roberts: There are various alternatives. We have already seen that the reduction of Purchase Tax does not in itself stimulate demand. The question of increased allowances to which the hon. Member referred is merely a re-distribution of income within the national purse.

Mr. Silverman: So is this.

Mr. Roberts: The second point is that the Excess Profits Levy, which we shall soon discuss, is also deflationary. We


are to take away a further £100 million from the demand which would otherwise be exercised on the capital investment scheme. I maintain that the reduction of tax which this Amendment seeks is the easiest and most effective way of stimulating the demand which we need.
This proposal will cost between £85 million and £95 million a year. I come to the question of how that is to be found. I believe that it is not now necessary to have the Budget surplus for which my right hon. Friend has budgeted. That is the argument that I want to put to the Committee. I apologise for the delay in reaching that point, but a lot of the blame must be attributed to the hon. Member for Nelson and Colne.
The argument which I wish to put to the Committee is that in the last six years of inflation the budgetary surplus was used as a deflationary measure in order to take away this surplus demand. I believe that at the present time we do not need that extra surplus. I believe that the scales have now tipped over to such an extent that we have come to the position outlined in the 1944 White Paper on full employment. I would remind hon. Members of what that very interesting document states when dealing with the question of timing. It says that,
 … the crucial moment for intervention is at the first onset of a depression. A corrective applied then may arrest the whole decline; once the decline has spread and gathered momentum, intervention on a much greater scale would be required—and at that stage might not be effective.
It is a question of judgment, and as the right hon. Member for Leeds, South, said, eventually all Budget arguments come down to a question of judgment. Hon. Members opposite may not think this is the time to start applying the policy on full employment contained in the White Paper of 1944. I maintain that it is, for the following reason. In the last three or four months we have seen the results of the profits of companies operating in the last year of the inflationary period. They are now appearing day by day in the various financial newspapers. I should say that in a large number of cases they are up; and that the Chancellor, when he comes to find his final surplus at the end of the year, will be faced with a higher figure than £500 million. This is a further argument which adds force to the one I am now putting forward.
I do not believe that at this present stage in our financial position we should take revenue in order to finance under-the-line expenditure. I believe the Chancellor would be wiser to deal with some of the under-the-line expenditure, such as borrowing by local authorities, by loan. I think the time has come to do that. I do not think it would hurt the financial position of the country to do so. I believe the time for this increased Budget surplus is passing.
I hope the Committee will agree that the whole of my argument is directed to an attempt to stimulate demand, in order to recreate employment in the textile industries and elsewhere. By this method we shall stimulate demand in most of the activities in which the individual best puts his money. I believe that the right way to deal with unwanted demand is through Purchase Tax or through the allocation of raw material schemes which we have operating at the present time.
If there is, for example, a television set into which it is considered not right to put materials, there are two ways in which the problem may be tackled. The Purchase Tax may be increased or the raw materials may be directed away from that form of manufacture. Coming from Sheffield, I know how much direction there is of scrap, coke, and all the other raw materials necessary to the main industrial life of the country; and those are the right methods to divert demand.
I come back to the main point of my speech, which is this question of timing—when we are to move from the theory of the Budget surplus to the theory of the creation of extra demand. At the present time we must do what we can in order to stimulate and increase production. This Amendment is designed to secure that effect. Unless we use the Budget as an instrument of production, as was outlined in the 1944 White Paper, I believe we are missing a great and a grave opportunity.
As I go about the back streets of the industrial town from which I come, I find increasingly, week by week, this drying up of demand. We find it in the small shops and in the houses, where there may be a man and wife who are finding things difficult. They may find that the curtains in their home need renewing but they


consider this is not the time to buy, because they have not the money in their pockets. That goes right through the whole country.
4.15 p.m.
Hon. Members may not agree, but I ask whether this is not a further sign that we are moving slowly from the period which I have called the period of lusty demand to a period when people are finding things difficult. If we are prepared to take this figure of £100 million from the Budget surplus which because of increased profit may not even reduce the total Budget surplus at the end of the year, and if we are prepared to do that now, I believe we shall be re-creating the demand we need in order to produce employment in areas in Yorkshire—and even in the area represented by the hon. Member for Nelson and Colne, who is treating me with such levity.

Mr. S. Silverman: Will the hon. Member give way?

The Chairman: If the hon. Member for Sheffield, Heeley (Mr. P. Roberts) does not give way, the hon. Member for Nelson and Colne (Mr. S. Silverman) must resume his seat.

Mr. Silverman: All the same—[Interruption.]—On a point of order—

The Chairman: I think I made the position perfectly clear. The hon. Member for Sheffield, Heeley is unwilling to give way, and therefore the hon. Member for Nelson and Colne must resume his seat. I think that is perfectly clear, and that is my Ruling.

Mr. Silverman: Of course I accept your Ruling, Sir Charles. My point of order was on quite a different matter. It is that if an hon. Member, while making his speech goes out of his way to misrepresent something—

The Chairman: That is not a point of order; it is a debating point.

Mr. Roberts: The point I am trying to make is a vitally serious matter to all our constituents, and I was a little surprised that the hon. Member for Nelson and Colne should think it was nonsense and not a matter of importance to his constituents.
What we have to do at this time is to say whether or not this is the particular moment at which to increase demand. As I have suggested, if the momentum of deflation comes, it comes quickly, and I believe it is already upon us. If we have to wait until next year, much more stringent Amendments may have to be put down in order to try to deal with what we are endeavouring to deal with now.
I apologise to the Committee for being so long, but I have been much interrupted. The motive behind this Amendment is a sincere desire to stimulate demand over the whole range of commodities and goods throughout the country. I believe it must be done through the whole range. The next Amendment on the Order Paper in my name—I do not know whether or not it will be called—deals particularly with earned income. If this proposal is not agreed to by the Government, there are other methods which we may utilise to do what we are trying to do. I do not know whether hon. Members are prepared to support an Amendment to reduce Income Tax, but they may be. I hope that hon. Members opposite have seen the light, although they have not been in that frame of mind in recent years.
I am quite certain that sooner or later a policy of the kind we are endeavouring to put before the Committee this afternoon will have to be adopted. It is only the Government, with the full facts before them, who can decide exactly when is the moment. It may be they are not convinced that it has arrived, and I shall listen with interest to the Financial Secretary when he replies. But I believe that the signs are such that every Member in this Committee must seriously consider whether or not we should begin to implement the whole structure as outlined in the White Paper of 1944, and use the Budget as an instrument for increasing production.

Mr. Roy Jenkins: The hon. Member for Heeley (Mr. P. Roberts) has made a most remarkable speech to the Committee. He managed to do two rather surprising things. First, he launched a wholesale attack upon the whole Budget of his right hon. Friend the Chancellor of the Exchequer. It was not merely a question of one tax being wrong; it was the whole concept of the Budget, which


his right hon. Friend said was to reduce demand, that was wrong. It is impossible to imagine a more sweeping condemnation of his right hon. Friend's Budget.
He also completely contradicted the main point made by his hon. and gallant Friend the Member for Angus, South (Captain Duncan), which was that this remission in taxation was desirable because it would stimulate savings. The main point made by the hon. Member for Heeley was that what we wanted at present was a great increase in expenditure. Therefore, of course, on the showing of his hon. and gallant Friend, there could be no remission in taxation which could be less well calculated to do what he said was necessary than a remission which might lead to a large increase in savings. There are many points which one could develop in reply to the speech he put forward. I see that the hon. Gentleman is muttering away quietly to himself—

Mr. P. Roberts: I was muttering away quietly to myself, because I really could not see the inconsistency which the hon. Gentleman was trying to put to the Committee. What we are trying to say is that this will cover the whole range of our financial life. If those who need new curtains use the money to buy new curtains, as I hope they will, that is a form of saving in itself. I believe that it is better to use one's savings to build up the capital in one's home than it may be to put them into a bank. All I say is that one person will deal with it in one way, and another will deal with it in another way.

Mr. Jenkins: I can well understand that the hon. Member is mentally a little exhausted after his speech, but I cannot understand him being quite so intellectually prostrate as one would believe from the reply he has just made.
Certainly his hon. and right hon. Friends on the Front Bench would tell him that there was a very sharp difference between something which would increase the amount of purchasing power, which was to be withdrawn from circulation, and something which would increase the amount of spending and thereby stimulate demand and, if he is right in his analysis, help to keep us out of the deflation in which he said we were at present.
I come back to the speech of the hon. and gallant Member for Angus, South. He started by telling us that his Amendment really meant something entirely different from what it said. He said "I really intended to have other Amendments down to make other reductions, but I forgot to put them down." This does not seem to be a serious way to come along with an Amendment which would cost £88 million. One does not even know whether the Amendment by itself would cost £88 million, or whether it would cost that amount if some other Amendments, which ought to have been on the Order Paper but are not, were accepted.

Captain Duncan: It would cost £88 million.

Mr. Jenkins: This Amendment would cost £88 million. Really, I do not understand. As the hon. and gallant Gentleman said that we ought to be discussing not only this but two other Amendments which went with this one, he ought to have told us what the three would cost. If this Amendment alone would cost £88 million then what we have to discuss has nothing at all to do with other rates of tax. It is something affecting only the standard rate of 9s. 6d.
Let us be clear who this affects so far as individuals are concerned. It affects, in the case of a married man with two children, people earning £19 10s. a week and above. So far as even a single man is concerned it affects people earning £13 6s. and above. Therefore, there is no doubt at all that this is a proposal for giving away £88 million which would go to a very limited class of people who are already very much better off than the average run of people in the country.
The argument is perhaps that this ought to be done none the less because of the great effect it would have upon incentive. Nobody will argue that something which helps incentive is not in itself good. But, of course, one cannot possibly argue that today without also looking at the other consequences in the form of the effect upon the distribution of income which such a proposal may have. One must weigh one consideration against the other. One must remember that this form of giving incentive would give a substantial amount more to people who under the Chancellor's Budget have already had a


substantial concession—who have already had, at a time when the Chancellor is appealing to the T.U.C. for wage restraint, a wage increase of about 25s. a week without even applying for it.
Also, from an incentive point of view, one should not underestimate the disincentive which there can be in giving to the people generally a feeling that benefits are not being fairly distributed. That would certainly be one of the results which would follow. The party opposite have always greatly exaggerated the connection which there is between high taxation and, they say, a general condition of disincentive. They always completely ignore the fact that, during the days of the Labour Government, when, I admit, there was extremely high taxation, there was none the less extremely buoyant production.
One cannot assume that there is this direct connection between giving incentive and high production. We have had the Chancellor's Budget and we are now in the first post-war Tory financial year. It was a Budget which he and some of his hon. Friends described as an incentive-Budget. Yet, for the first time since 1946, we are in a position in which production is going down. I do not say that that is due to the Budget, but that it ought to make a lot of hon. Members opposite think that they can put much too closely the connection between high production and incentive in the form of low taxation.
The other point on which this bears is its effect upon company profits. A remission of 6d. on the standard rate of Income Tax would affect not only individuals but, very much indeed, company profits—the amount of their profits which companies were able to retain. The hon. and gallant Member for Angus, South, devoted a good deal of his speech to saying how difficult it was becoming to get risk capital and that we ought to encourage a great flow of risk capital into our industry. He also said that he thought on these matters that there was not too much between him and his right hon. Friend, but that it was just a matter of finding that maybe this year his right hon. Friend could not help although perhaps next year he could.
The hon. and gallant Member must remember that this is a Finance Bill

which contains the proposals for the Excess Profits Levy. I presume that the hon. and gallant Member will be marching through the Lobbies in a day or two's time in support of the Excess Profits Levy. For him to come along today to ask for 6d. off the Income Tax at the same time as he is supporting an Excess Profits Tax, which is a far more disincentive tax on risk capital than is Income Tax, is really nonsense.
The two hon. Gentlemen are in an absolutely hopeless position. I do not like the Excess Profits Levy, but I am in favour of getting a lot of taxation from profits. They are not, apparently, in favour of that. They are in favour of reducing Income Tax at the same time as they support a Budget which introduces a new tax which is as disincentive as possible. The Amendment has been put forward in an extremely muddled way. It is in itself at present a highly undesirable proposition, and I hope that the Chancellor will not accept it.

4.30 p.m.

Mr. Jennings: I make not apology for supporting this Amendment, because when hon. Members opposite were sitting on this side of the House I supported a similar Amendment. I support this Amendment today for one or two simple reasons.
The first reason is that, from my knowledge of taxation generally, I believe that this country is now suffering under a penal system of taxation, and that it is high time that it was reduced. I believe that, from the point of view of the private individual, it is becoming increasingly difficult to maintain his home and educate his children, and that is particularly true of the professional classes. I can speak of many kinds of professional people who are suffering severely under this system of taxation and who should be given some relief immediately.
I do not put forward this argument on a party line, because I adopted the same course when I was in Opposition, but the expenditure in our Budget today has reached a vast amount and no Chancellor of the Exchequer for years past has even thought about economy. I do not know whether I speak for many of my hon. Friends on this side, but I take the view that it is high time that this Government instituted some inquiry into the reduction


of taxation and the cutting down of Government expenditure generally, because that is what the country wants. I am perfectly sure that it could be done.
I should like to refer to company Profits Tax which has been mentioned by my hon. Friends who have spoken in support of this Amendment, and I would like to quote from a first-class article in the "Sheffield Telegraph" which appeared over the name of the City Editor on 13th May:
Portals, makers of the paper for the Bank of England's notes, needed an extra £21,721 to maintain their plant. To get it they had to increase their profits by £120,000. The extra profits of £100,000 went down the tax drain.
The Committee will see from that quotation what a vicious system this is, and how it is having the effect of increasing prices to such an extent that firms may be able to retain sufficient money to keep their plant and machinery going. I make no apology for saying that, up and down the country, every chairman of a substantial company at annual meetings has said the same thing.
Turning to the subject of shipping, I should like to quote from the speech of Mr. F. A. Bates, chairman of the Cunard Steamship Company, the owners of the famous "Queens":
Computation of profit for tax purposes opens a tax draincock through which capital assets are irretrievably lost.
That is the position today. We are not taking profits from these companies, but taking their capital, because we are not leaving sufficient in the business for the maintenance of plant and machinery. In my profession, I see it every day. The liquid position is getting worse, and many companies are being forced to try to do what the Chancellor has made almost impossible for them, and go to the bank and try to get some liquidity from the bankers, with the result that plant is not being renewed and is not even being properly maintained, while efficiency is also being affected. I believe that one of the greatest spurts to efficiency could be given if some relief could be obtained, not only for private individuals but for these companies as well.
I believe that the present Government now have a grand opportunity of starting what the great mass of the people now think they ought to do, and that is to cut down all Government expenditure in a

big way and to provide for some taxation relief. People generally are not satisfied, and I personally am not satisfied, that the Government have done all they ought to have done in the shape of cutting down expenditure in order to provide some relief of taxation. This penal system of taxation is a most serious thing, and it is now almost as high as it was during the worst years of the war.
It is dreadful that the mass of the people and industrial companies have to be drained by high taxation while the Chancellor is hanging on to a surplus of £500 million. I think that most of that money should be allowed to fructify in the pockets of the people. [HON. MEMBERS: "Hear, hear."] I know why some hon. Members opposite are cheering; it is because they are looking forward to some share of the £500 million.
For these simple, and, I think, fair and honourable reasons, the Chancellor should have another look at the present system of taxation. If he cannot accept this Amendment, then let him say that he will see that great economies are, in fact, made during the next year, so that, on another occasion, he will be able to offer the people the remission of taxation which they require, and ensure that the drain that is now going on will be stopped. If he does so, he will find that industry will be able to maintain its plant and machinery; will be able to hold up its head, and, what is more important, compete in the export markets of the world.

Mr. Douglas Jay: The hon. Member for Hallam (Mr. Jennings) has delivered another formidable stab in the back at the Government.

Mr. Jennings: I was stabbing the Opposition in the back, not the Government.

Mr. Jay: No doubt the hon. Gentleman will be voting against the Excess Profits Levy when we come to have a look at it in a few days' time.
The hon. and gallant Member for Angus, South (Captain Duncan), and his hon. Friend the Member for Heeley (Mr. P. Roberts), if they agreed on nothing else, both supported this Amendment on the ground that it would have a beneficial effect on the incentives of active workers, and, therefore, on production and productivity. The hon. Member for Heeley said that the whole Budget had been


based upon that argument, and there I agree with him.
For that reason, it might be convenient to have a short discussion on this very important issue about incentives, which really does go to the root of the whole of the Chancellor's Budget, and, of course, is also relevant, not merely to the proposed reduction in taxation which, strictly, we are now debating, but also to the proposal which the Chancellor himself brought forward.
That argument was that a reduction in Income Tax, for the sake of which the Chancellor really made his cuts in the food subsidies, would have so stimulating an effect on incentives and on production as to play a major part in easing our balance of payments problem. This was supposed to justify the Chancellor's Budget. These grounds were supposed to justify the massive transfer of income which the Chancellor made mainly for the benefit of fairly well off people and at the expense of those at the bottom of the scale.
The Chancellor has told us that, of his Income Tax reliefs, £50 million went to people earning £20 a week. He has, of course, already discovered the dangers of the consequences of his policy on prices and wages, and, at a later stage, on exports, of which he was warned by the T.U.C. both before and after the Budget, and also from these benches during the Budget debate itself. They are now beginning to appear in reality, and are pushing up this wage-price spiral. [Interruption.] I do not know whether the hon. Member thinks that prices shown in the retail price index are falling at the moment; as a matter of fact, they have risen. Well, we will wait and see.
The Chancellor now finds himself forced into the position of arguing that those who earn over £20 a week need an incentive by way of tax relief, while those earning under £10 per week must be more highly taxed by the rise in food prices, and, in those circumstances, he is perplexed to find that he really has no moral authority for asking for wage restraint.

Captain Duncan: I hate to interrupt the right hon. Gentleman, but while the Chancellor said that £50 million of his relief went to higher paid people it is fair to point out that £178 million went to those earning less than £1,000 a year.

Mr. Jay: That is a piece of arithmetic, but surely it is relevant to point out that benefits which we consider unnecessary are going to those who earn £20 a week. We cannot, however, follow out this argument fully on this Clause, but we should examine the basic question whether reductions in direct taxation have a major effect on incentives, and, therefore, on the production of the community. Let us try to follow the argument briefly, step by step.

Mr. Jennings: Will the right hon. Gentleman answer the argument about Portals, who make the paper for the Bank of England, and the replacement of their plant and machinery? Will he deal with that one, if he can?

Mr. Jay: I gather that the hon. Gentleman is complaining that it is difficult to replace machinery at existing rates of taxation, but it is, of course, the policy of his Government that on account of rearmament there is to be some delay in re-equipping generally at the present time. Broadly speaking, I think that most agree with that, but it was not the issue I was attempting to argue.
Looking at this issue of incentives, the first fact that emerges is that a very large part of the community are not in a position to earn incomes which vary with work done, but are getting fixed weekly or monthly payments. That applies, of course, not merely to hundreds of thousands of civil servants, clerical workers, and so on, but also to very large numbers of railwaymen and postal workers, and hosts of others. It is probably only a minority of employed people who can, in fact, earn more by working harder.
But even among those who can nominally earn more by piece rates, overtime, and so forth, in practice at the present time a further quite large proportion cannot do so. In the textile industry, for instance, it is not lack of effort, but lack of orders which is limiting production. Again, in the case of a large part of the engineering, iron and steel and other metal industries, it is not lack of effort either, but lack of materials. That accounts for quite a large part of manufacturing industry and leaves us with a still smaller number of people for whom the Chancellor's basic argument may perhaps be relevant. The


remainder includes the very important coal and building industries, and there, I think, the Chancellor's argument certainly has some weight.
Thirdly, even within that minority, it does not for one moment follow�žand I think this is what hon. Members opposite almost always forget�žthat everybody who can earn more by working harder will necessarily do so when direct taxation is reduced. Some will, of course, but some will not, and it is very hard to say how many fall into each of those two groups. There are, after all, a large number of people whose main anxiety is to earn enough net income to maintain their family, and the effect on them of higher taxation may well be to increase their effort and their will to work, and of a lower tax actually to decrease their effort.
I have often heard it said in the last few years�žI have no idea how far it is true�žthat even in the coalmining industry an increase in wages will not, in fact, mean greater effort and greater output because many coal miners seek to earn a particular net income each week and are not interested in earning any more. If that is so, and in so far as that is true, of course, this reduction in Income Tax will not increase output, but will actually diminish it.

Mr. Beverley Baxter: Did the right hon. Gentleman say what he is now saying when the Socialist Government reduced the standard rate of Income Tax from 10s. to 9s.?

Mr. Jay: The hon. Gentleman is not following very carefully what I am saying. I am not arguing, of course, that there is nothing at all to be gained by way of incentive as a result of a reduction in direct taxation. I am merely trying to establish dispassionately how important this influence is so that we can weigh it against the disadvantages of taking this action. I think that what I have said is perfectly accurate.
4.45 p.m.
I was trying to argue that there are some people�žit may be a minority�žwho do not, in fact, work harder as a result of changes in taxation. Let us also remember�žthough this may not be very important�žthat 50 years ago in this country there was a small class of people living on unearned incomes who did very little work at all. Very nearly all those people

today have been added to the working population of the country. What is the reason for that? It is, of course, direct taxation which has brought that not very numerous group of people into the working community of the country.
I only say that to suggest that a change in direct taxation does not wholly influence the amount of work done in one direction, but that both tendencies operate, and in reaching a fair judgment on this we ought to take both those tendencies into account. However, on this particular point, let us give the benefit of the doubt to the Chancellor�žand I hope this will satisfy the hon. Member for Southgate (Mr. Baxter)�žand assume that within the minority for whom this tendency operates at all, the majority of them, though certainly not all, will tend to work harder if direct taxation is reduced.
Even so, having made all these deductions we are now clearly reduced to a quite small minority of workers in the country whose output might be increased by tax changes. But, of course, there is still one further deduction we have to make, and that is of the people who are not subject to Income Tax at all. This argument is rather like the 10 little nigger boys, but there is. I believe, substance in it.
Having made these deductions, let us finally look at the minority of people actually affected and consider the mathematical effect of the Chancellor's original proposals and, mutatis mutandis, those the hon. and gallant Gentleman is proposing today. The Chancellor had an argument with my hon. Friend the Member for Reading, South (Mr. Mikardo), about the figures, and in reply to my hon. Friend the right hon. Gentleman admitted that the effect of his Budget on some people, if they were prepared to work harder and to earn an extra pound or two, would be a few pence.
But he said that was exceptional, and I fully accept his arithmetic. He instanced as typical�žand I also accept this for the sake of the argument�žthat if we take a married man with two children living wholly on earned income and receiving a wage of £8 a week, on £2 which he earned over and above that £8 he would have his tax reduced by this Budget from 5s. 1d. to 1s. I think the Chancellor will recall that that is right.
That, I think, is a case rather favourable to the Chancellor's argument, as was the 2d.to that of my hon. Friend's. The average case is probably 3s. or 4s. But, taking the Chancellor's case, that means that out of the final £2 earned in the £10, this particular worker will retain 39s. instead of 35s. Can it seriously be contended�žand this is what I want to put to the Committee today�žthat that prospective small difference�žand it is small in £10�žin net earnings, affecting what is clearly a small minority of workers, can have any major influence on our total national output? I should have thought that the only possible honest answer is that it cannot.
My hon. Friend the Member for Stechford (Mr. Roy Jenkins) pointed to the fact that actually there has not been any increase in production, rather the reverse, since the Chancellor's Budget. That is a post hoc propter hoc argument which he did not press too far. I suggest that the consideration I have advanced would indicate exactly the same conclusion.

The Chancellor of the Exchequer (Mr. R. A. Butler): Would the right hon. Gentleman agree that his argument is somewhat difficult to follow owing to the fact that the reliefs we are discussing have not yet come into operation? If those reliefs are not attached, the question whether there is more production or not would not make a fair argument.

Mr. Jay: I think that, at the time, the right hon. Gentleman said that the prospect of these reliefs would have a good psychological effect, but I do not rest upon this post hoc propter hoc argument at all. I suggest the Chancellor's argument is greatly exaggerated and cannot be pressed nearly as far as the Chancellor pressed it. When one really examines that argument it dwindles almost to the point of disappearance.
The Chancellor is now simultaneously asking for wage restraints and giving tax reliefs of £1 a week and upwards to those with four-figure incomes. His only defence of that�žI think he will agree�žis really that these bonuses to Surtax payers are part of the Income Tax reliefs necessary to give incentive to wage earners at lower levels. Even then it is not true that to give benefits lower down one has to give

them higher up at the same time. Indeed, reliefs in Income Tax were given in our 1951 Budget which benefited all those with families up to a certain level but imposed higher taxation upon those above that level. That is perfectly possible. For instance, by that Budget a married couple with two children and an income all earned were better off up to about £20 a week and worse off above that level. Thus Income Tax is quite flexible enough to produce that dual effect if it is one's purpose to do so.
Therefore, I say, in reference to this Amendment that�žif one really followed the argument logically�žthough we all agree that, other things being equal, any reduction in any tax is desirable, nevertheless no case can be made out at all on the ground of incentive or on the technical ground of practicability in the structure of Income Tax, either for the proposals put forward in this Amendment or for the unfair distribution of income by taxation and food subsidies which the Chancellor wilfully carried out this year.

The Financial Secretary to the Treasury (Mr. John Boyd-Carpenter): We have really had two debates on this Amendment. First, we have had a debate on the narrow terms of the Amendment, that is to say a discussion on a proposal to reduce the standard rate of Income Tax by 6d. And we have now had from the right hon. Gentleman the Member for Battersea, North (Mr. Jay) his criticisms of various adjustments of the tax which, in point of fact, are more precisely set out in a Clause which we have not yet reached. So, in a sense, we have had two debates.
If he will allow me to say so, the right hon. Gentleman the Member for Battersea, North, has never been awfully clear on this subject of incentive. He revealed that, for example, at Question time last Thursday. He suggested then that it was a debatable and doubtful proposition, that if one paid less tax on one's earnings one kept more to spend on oneself. His doubt on that, which to most of us is not a very difficult proposition, has affected the whole of his very interesting argument today.

Mr. Jay: That is not a reflection of what I said at Question time. The hon. Gentleman has misunderstood it and is making a debating point.

Mr. Boyd-Carpenter: I shall not press it too far, but the right hon. Gentleman did appear to regard as controversial a proposition which most of us would have criticised only on the ground that it was an obvious platitude. But I am not at all clear from his argument today whether the right hon. Gentleman regards tax reductions, in the form in which my right hon. Friend has brought them forward, as stimulating or not. He qualified and cross-qualified his views on the subject so that he left a far from clear impression on the Committee of where he stands on this matter.
But he thought incentives did not, or alternatively should not, arise in a case of people with more than £1,000 a year. That was the one theme that reappeared throughout the texture of his speech. I find myself completely at variance with the right hon. Gentleman on that. Many of the people in that category are people doing extremely useful, difficult and responsible work under trying conditions, and it really would seem that, if one once accepts�žas I think in his heart the right hon. Gentleman does accept�žthat it is to some degree encouraging to be allowed to retain a fair proportion or a larger proportion of one's gross earnings, one must accept that one cannot limit the application of that figure to £1,000 a year. Nor, to give credit where credit is due, has that been the line which the right hon. Gentleman's right hon. Friends have adopted in the past.
Indeed they have gone much further in that respect than has my right hon. Friend. The right hon. Gentleman the Member for Battersea, North will recall that, taking a person whom he regards as even a less admirable citizen than the £1,000 a year man�ždoubly less admirable in his view�žthe £2,000 a year man with a wife and children, his right hon. Friend the Member for Bishop Auckland (Mr. Dalton) in 1945 relieved that man of taxation to the extent of £98. The late Sir Stafford Cripps did very nearly the same thing when he relieved him to the extent of £86. To give the background of the matter, I should add that the right hon. Gentleman the Member for Bishop Auckland in that same year relieved the £20,000 a year man of no less than £324 of taxation. The right hon. Friends of the right hon. Gentleman the Member for Battersea,

North have done better in the past than the right hon. Gentleman has done in his speech this afternoon.

Mr. Jay: The hon. Gentleman always attempts to conceal that in those two years, so far from reducing food subsidies and taxing people who were lower down the scale, we actually raised the food subsidies. Our complaint now is that a reduction is made in the tax and at the same time those below tax level are being made worse off. Surely the hon. Gentleman must have grasped that point by now.

Mr. Boyd-Carpenter: Perhaps the right hon. Gentleman has grasped the point that in both those years, as indeed in all years for which his right hon. Friends were responsible the level of prices was rising steadily. They may say that they did not mean that to happen and that they could not help it. That may be so, but if the right hon. Gentleman is putting in this context my right hon. Friend's readjustments of food subsidies, then, for the purposes of true comparison, he must remember that under the administration of his right hon. Friends, whatever may have been their policy on food subsidies, general prices affecting the necessities of life were rising during those two years. Therefore, the right hon. Gentleman is not entitled to make anything of that argument.
I want to follow the right hon. Gentleman a little further on this very question of the effect upon the lower level of taxpayers. That whole of the right hon. Gentleman's argument equated Income Tax and food subsidies. They were the two factors to which he referred. I do not know to what extent food subsidies are in order on this Amendment. If they are in order and are therefore a material matter for the Committee to consider, I must remind the right hon. Gentleman that they are not the only factors in this calculation.
5.0 p.m.
If he wants to make a calculation of the effect on the lower levels of taxpayer he is compelled to take into account the various improvements in the social services to which my right hon. Friend referred in his Budget speech, particularly the increased family allowances and the increased health and unemployment benefits and old age pensions.
If the right hon. Gentleman is simply going to do a little sum on a bit of paper and say that this person gets no relief in Income Tax, generally for the very good reason that he does not pay Income Tax anyhow and it is not easy to relieve a man of tax if he does not pay it, he must put on his bit of paper the reliefs in the form of social benefits which the person is gaining. That is the only fair way to make the calculation which I know he enjoys making.
We do not accept the implication in the right hon. Gentleman's speech that it is wrong to give the incentive of tax reduction to people because they happen to earn more than £20 a week, though I would remind the Committee that we have made no special provision for that. It is only in the same bands of income that the adjustments apply. All we have done is not take countervailing measures to deny them reliefs which the people at the lower levels are getting, and, in our view, that is right.
I would point out very respectfully to the right hon. Gentleman that if he is going to do any more of these calculations as to the effects upon individuals at the lower end of the scale he really must, in the language so often used from this Bench, take all relevant considerations into account in making his calculations, and if on the one hand he is including food subsidies, the relevant considerations are bounds to include social service improvements on the other hand.
I now turn to what was said by my hon. and gallant Friend the Member for Angus, South (Captain Duncan), whose Amendment�žperhaps for a few moments the Committee has forgotten it�žwe are discussing. From very much of what he said, I do not dissent. In the realms of general principle, in his admirable speech he gave a very balanced exposition of certain very important aspects of the matter.

Mr. Roy Jenkins: Would the hon. Gentleman also apply those remarks to the speech of his hon. Friend the Member for Heeley (Mr. P. Roberts)?

Mr. Boyd-Carpenter: Apparently the hon. Gentleman is seeking a bouquet for himself; but I realty must be allowed

to decide the distribution of bouquets without the hon. Member's assistance. I would remind him that it is the Amendment of my hon. and gallant Friend the Member for Angus, South that we are discussing, a reminder which, as I have said, most of us perhaps rather need.
My hon. and gallant Friend the Member for Angus, South will appreciate that we have recognised a great deal of the force of what he said by the reductions in Income Tax liability which we have provided in this year's Finance Bill. I must not particularise, Mr. Bowles, or you will, I am certain, point out to me that they arise not on this Amendment or Clause, but subsequently. However, my hon. and gallant Friend will appreciate that concessions on Income Tax amounting in all to £180 million in the current year are made in the financial proposals now before the Committee. His proposals�žI think he will find the figures convenient�žwould add a further £83 million this year, or £95 million in a full year. That would be a figure over and above the £180 million in the current year.

Mr. William Keenan: Would the effect of the Amendment be £83 million only? Would it not have some effect upon adjustments of Surtax later as a consequence?

Mr. Boyd-Carpenter: The total cost of the Amendment would be the figures I have given. I can assure the hon. Member of that.
My hon. and gallant Friend indicated in his speech that he did not really expect that it would be possible for my right hon. Friend in this year's proposals to go further than that, and, apart altogether from the detailed questions on the merits of his proposal, I am afraid that the additional cost in respect of Income Tax concessions is one which it is not possible for my right hon. Friend to accept. However, in his own speech my hon. and gallant Friend made it clear that no one would be more surprised than he had I, when I rose to speak, indicated, at any rate this year, any other line. Equally, he will realise that much of the reasoning behind his speech carried with it very solid confirmation of what my right hon. Friend has been able to do in the proposals before the Committee.

Mr. Mulley: With the penetrating wisdom that he often brings to our discussion, the Financial Secretary to the Treasury said that it is impossible to relieve a man of tax if he does not pay tax. It is true that it is impossible to relieve people of Income Tax if they do not pay it, and, therefore, the Income Tax alterations in the Finance Bill, as an incentive, do not affect a great number of people.
But the Chancellor does not also take the line that it is impossible to put on people a burden that they cannot bear. Fundamentally, our criticism of the Budget is that in order to provide Income Tax reliefs, the incentive effect of which at best is speculative, as my right hon. Friend the Member for Battersea, North (Mr. Jay), has shown, great burdens have been put on the lower income groups.
We have had a very remarkable series of arguments from hon. Members opposite in support of the Amendment. I believe the main reason is that the sponsors of the Amendment cannot put succinctly the real reason why the Amendment comes forward. I believe the real reason is that they feel that they are under an obligation to do something more for their wealthy friends.
I hope the citizens of Sheffield will note that their two Liberal-Conservative hon. Members have entertained the Committee this afternoon with a proposal which will not benefit a single person earning less than £650 a year and will not put a halfpenny into the pocket of a married man with two children unless his income is over £1,000 a year. As the hon. Member for Hallam (Mr. Jennings) said, the main advantage of the proposition is not for the ordinary taxpayer but is for private and public companies, and they would be relieved of a substantial amount of taxation. As my hon. Friend the Member for Stechford (Mr. Roy Jenkins) said, that is a remarkable proposition at a time when we are asked to consider an Excess Profits Levy on industry.
The Opposition would like to see an even greater amount of taxation imposed upon company profits. Indeed, the hon. Member for Heeley (Mr. P. Roberts) said that the thing which interested him was that at the present time, with accounts coming forward, facts which the Chancellor could not have known when

the Budget was prepared, show vastly increased company profits for the last financial year. I hope the Financial Secretary will have noted his hon. Friend's remark and will again look at profits taxation from that angle, not for the purpose of relieving companies of Income Tax but, as the Opposition will propose later, in order to re-impose Profits Tax at its former level. One feature of the proposal before the Committee is the very unsatisfactory effect it will have on company profits taxation should it be passed.
I now wish to make a brief reference to what I think is the crux of these Finance Bill debates, which was put into words by the hon. Member for Heeley, who said that he knows the problem of the lack of demand as measured in the shops in the back streets of Sheffield. I think I know at least as well, and probably better, the back streets to which he refers since his constituency and mine adjoin in such a neighbourhood. He may also have cause to reflect on the municipal election results in the ward bearing the name of his constituency, which may indicate the conclusion his constituents are drawing as to the reason for the tightness of money in the shops and back streets of Sheffield.
The reason, of course, is not because the standard level of Income Tax is 9s. 6d. in the £ and not 9s. The reason is that, taking the Budget as a whole, the spending power of the ordinary workingman and woman has been severely limited by the increased cost of living as a result of the food subsidy cut, the failure of the Government to implement their electoral promise to reduce the cost of living, increased fares due to the increased Petrol Duty, and the D scheme which brings clothing not formerly taxed into the Purchase Tax range.
It is for these reasons, because the ordinary man and woman has to spend more for the basic necessities of life, that there is a shortage of demand in the shops to which he referred.

Mr. P. Roberts: The hon. Gentleman is putting the wrong emphasis on this. These things are the inevitable result of the inflation under the late Government over the last three or four years.

Mr. Mulley: I do not want to detain the Committee while the hon. Gentleman


and I have a long Sheffield argument, but those Members of the Committee who were present when the hon. Gentleman spoke will recollect that, far from criticising the six years of Labour Government he referred to them as six years of "lusty demand," which I understood to mean, measured in the back streets of Sheffield, six years of prosperity as compared with the beginnings of depression which the ordinary working-man and woman are now beginning to feel.
It is absurd and, I venture to say, politically dishonest for hon. Members opposite to come here with these complaints about the lack of purchasing power and the lack of demand at the present time when their own Front Bench have made it their consistent financial policy to bring about a situation of deflation. They cannot increase the Bank rate, tighten up on money generally, have a restriction on higher purchase arrangements and then come along and say "There is a surplus of £500 million. Let us have this and that concession."
If there is a case for reducing the Budget surplus�žalthough I do not think this is the time or the place to examine that argument in detail�žthe very last and the worst way of doing it is to reduce the standard rate of Income Tax. It would be far better to reduce the allowances, as we hope to propose later in the debate, when we shall hope to have the full support of hon. Members opposite in the Lobbies if necessary. It would be much better to do it by exempting a further number of people from the Income Tax range altogether. Both from the individual's point of view and from the national point of view it would be much better if the food subsidy cuts were restored; if something were done to cut down the cost of transport—�ž

Sir H. Williams: By cutting down railwaymen's wages?

5.15 p.m.

Mr. Mulley: Railwaymen's wages need to be increased. In addition, remove some of the impositions on indirect taxation imposed by the party opposite. It is absurd for the Chancellor to expect the trade unions to restrain wage increase demands when, not only has the cost of living gone up very substantially, but hon. Members opposite are asking for a reduction in the standard rate of Income

Tax to benefit those with large incomes �žand I expect we shall hear pleas later on to reduce the incidence of the Excess Profits Levy. Hon. Members opposite constantly plead for the reduction of taxation on the wealthy and on corporations. While that is being done it is fantastic to expect the trade unions to sit back and ignore the real problem measured in the back streets of Sheffield.
I ask hon. Members opposite at least to be realistic. If they do not like the Budget they alone can do anything substantial about it. If they will join with us in the Division Lobbies we can begin to amend the Finance Bill. But if they say one thing and vote differently, then we on this side of the Committee, being in a minority, can only make our protest. They must bear the responsibilty for the financial policy of the Government. After all, it is their Government.
I hope we shall hear less of this talk by hon. Members opposite who merely try to get it both ways. When they were in Opposition they could always say, "We would like to reduce this tax, and to do this, that and the other," but never would they tell us what expenditure they would cut, or in which direction alternative finance could be raised. Now that they are on the Government benches�ža position they were very keen to attain judged by the depths to which they stooped to get the electoral support to put them there—�ž

Mr. Frederic Harris: The Socialists ran away from their responsibility.

Mr. Mulley: If the hon. Gentleman has any doubt about what I say, I ask him to reflect on the municipal election results, and to press on his own Front Bench for another General Election now.

Mr. Harris: I said the election was made possible by the Socialists running away from their responsibilities last October.

The Temporary Chairman (Mr. Bowles): I must point out that the debate has gone very wide. I have been here listening to the debate the whole time, and it must not get any wider.

Mr. Mulley: I am afraid I was tempted into indiscretion by the interjection of the hon. Member for Croydon, North (Mr. F. Harris).
We have had a long debate, and there are many others who wish to speak, so I conclude by saying that if there is any surplus money to be given away by the Chancellor, the reduction of the standard rate of Income Tax is not the best way to do it. I hope that we shall have fewer requests by the party opposite for further relief to the rich at a time when, as the hon. Member for Sheffield, Heeley, warned them, the problem is to do something for the people in the back streets of Sheffield and other cities.

Sir H. Williams: I imagined for a time that we were debating the Gracious Speech. The debate did get very wide, and the hon. Member for Sheffield, Park (Mr. Mulley), protested that he was led astray. He was not led astray. He said that we on this side had stooped to something or other, and he provoked interruption. He, and he alone, was responsible. I shall not be led astray any more.
I did not have any luck in the Budget debate or on the Second Reading. We are between the "whips" on this side and the scorpions on the other side. I prefer the "whips" to the scorpions; therefore, I shall not embarrass the Government in the Lobby, although I may embarrass them a bit with my speech. The Chancellor has inherited a difficult situation, but he has also inherited some bad practices. I think that the late Lord Keynes and the late Sir Stafford Cripps�žboth have been dead some time now�ždid immense harm to this country by introducing certain novel financial procedures. [An HON. MEMBER: "What about full employment?"] They did not introduce full employment. They did not invent it, nor did they think of it. It is largely an accident, anyhow.
But let us keep to the argument. Between them I think they invented the device of budgeting for more than we need to meet current expenditure. That I regard as fundamentally evil, yet it is the only argument against this concession that it will cost £83 or £88 million a year. The Financial Statement is not a very intelligible document, as a result of the past malpractices of the Chancellor's predecessors, and there are three pages here which emphasise that point.
The final page tells us that we have a surplus of something like £430,000�žthe exact sum does not matter at all. I think it is £430,813. But if hon. Members look

at pages 34 and 35 of the Financial Statement, they will see what is called the "Conventional form of Accounts"�žnot in the least the convention by which I was brought up. On page 35, there is a table headed "Alternative classification." On these two pages the surplus is given, first, as £538 million, and, secondly, as £687 million, and then there is a footnote which says:
This figure does not take account of the net charges due to the reduction of food subsidies.
What this amounts to I do not know, nor do other hon. Members; and I very much doubt whether the Chancellor of the Exchequer or the Financial Secretary know. Thus, we can start on that basis�žthat this is a very unintelligible document.
We are being taxed very heavily by Income Tax in order to provide the Government with capital sums which they lend out, as usurers, to a variety of people. I do not like the system and it is because of this bad system that we have direct taxation at a level which, if persisted in, will destroy the industries of this country. Companies are regarded as wealthy corporations by hon. Gentlemen opposite. One hon. Gentleman referred to the effect of this concession on companies. But, if we want to promote the future of British industry, every company is being grossly overtaxed today. After all, only about one-quarter of what a company makes in apparent profit ever reaches the shareholders, and as a rule much less. I have worked out figures in a number of cases. Tax free in most cases, wages and salaries are about 16 times as much as dividends.

Mr. Donald Chapman: Why not?

Sir H. Williams: The hon. Gentleman says, "Why not?"; but it indicates that distributed profits have no significant influence on the cost of living. That is the real issue. Hon. Members ask, "Why not?" At the present time, persons are so heavily taxed that they are individually incapable of saving. There is no source of new capital for industry except the collective saving represented by insurance companies and a few other bodies which organise collective savings through life insurance premiums and so on. No longer can a private individual start an enterprise. The end of that policy is major disaster.
I represent a mixed constituency�žwhat would be called a middle-class constituency�žand many of my constituents travel to London every day. A lot of them are nicely housed, and hon. Members will say that behind the front curtains these people live in happy and contented financial circumstances. Not in the least. I have not the slightest doubt that at the end of each year, when they add things up, a very large proportion of my constituents are worse off than when they started, because their savings are gradually being dissipated.
I want this tax reduction not for any of the high-minded reasons which have been given but because I want people to be able to retain in their own pockets a larger portion of their own income. The position has become quite intolerable. A large number of hon. Members opposite would go home with songs in their hearts and smiles on their faces if they could tell their wives tonight that Income Tax had been reduced by 6d. in the £. That is true, and right hon. and hon. Gentlemen know it perfectly well. This idea that everybody is rich who earns more than a £1,000 a year is strange, because that is a very low standard of being rich from the point of view of a great many right hon. and hon. Gentlemen opposite. The then Prime Minister, now the Leader of the Opposition, thought it was extreme poverty to have £10,000 a year, all liable to tax.

Mr. S. Silverman: Is not the hon. Gentleman making a very false point? It is perfectly true that everybody who would get an advantage out of this proposal would be very pleased to get it. That is not a matter for dispute or a matter for argument. The question is whether, in all conscience, one is entitled to have it when, as the hon. Gentleman said, £1,000 is not richness�žbut £500 or £300 is abject poverty.

Sir H. Williams: The hon. Member for Nelson and Colne (Mr. S. Silverman) has made one speech and 15 interventions. Fortunately, he went out to have a cup of tea and things went on nicely for a time. Now he has come back. After all, unless one can reward adequately the people of outstanding brains and personality and leadership, this country will go down the drain. That is the reality, that we shall lose these people. The emigrants

we do not want to lose are those people of outstanding ability.
I do not know whether hon. Gentlemen opposite believe in the doctrine of equality. I do not. The crafts unions do not. They look after their differentials. I do not believe in equality and I do not believe there is any other hon. Member who does believe in it, yet all the speeches from the benches opposite are based on the doctrine of equality. That doctrine leads to disaster. They began with it in Russia, but I suppose the gentleman who presides over the affairs of Russia is now, to all intents and purposes, the richest man in the world.

The Temporary Chairman: The hon. Gentleman is going very wide. He must confine himself to the Amendment.

Sir H. Williams: I should not have said these things, Mr. Bowles, but for the fact that the doctrine of hon. Members opposite was to protest against differentials. I therefore gave an example of what happens if you push a Socialist doctrine to its logical conclusion. The basis of the interventions of the hon. Member for Nelson and Colne is that this Amendment is all for the benefit of the wealthy and is hard luck on other people.

Mr. S. Silverman: The hon. Gentleman is most courteous. He gave way to me before I even decided to intervene. Indeed, I have almost forgotten what was the point. The hon. Gentleman must try to draw a distinction. Because we say that we ought not to take £100 million from the Treasury and give it to the people who need it least instead of to those who need it most, that does not mean that our views are not perfectly consistent with accepting reasonable differentials of income. Because we object to one, it does not necessary follow that we cannot accept the other.

Sir H. Williams: I do not know what are the hourly rates of the A.E.U. and the solicitors' union, but I imagine that there is a very substantial differential. I gave way to the hon. Gentleman because I know he is always "money for jam" when one gives way to him. I do not want to take up too much time in the debate, because already it has been quite lengthy, but I want to protest in the interest of those people who, by their efforts and their talents, and by their endeavours, have built for themselves what they


regard as a decent standard of living. I think they are entitled to retain a reasonable proportion of their income, while making such sacrifices as are appropriate and as are necessary because we fought a great war.
The doctrine, as I understand it, is that those people are not entitled to a higher standard�žor not a materially higher standard�žthan those who could not exist economically unless such people had a capacity for leadership. Without that leadership, this country goes to disaster. I am too old for that to matter very much to me. I am pleading for the people of the younger generation who, today, have no conceivable chance of saving enough out of their incomes ever to be able to retire on the basis of their own resources.

Mr. Norman Smith: The hon. Member for Croydon, East (Sir H. Williams) was right in one very important particular and wrong in another, no less important, particular. He was right in putting before the Committee the issue raised by this Amendment, which he stated quite clearly. The issue is, shall we reduce the Income Tax in order to leave in the pockets of private individuals more money wherewith to finance investment? It is that, on the one hand; or, on the other hand, the alternative, which he links with the names of Cripps and Keynes, of budgeting for a surplus in order to finance capital investment in that way. He was right in putting that very clear alternative before the Committee.
Where he erred was in supposing that the Government budget for a surplus and then lend the surplus out at usury. Well, they do not. A Government budget for a surplus and use the surplus to cancel out floating debt, enabling banks to lend out usury without increasing total deposits. But let us get back to the Amendment.

5.30 p.m.

Sir H. Williams: Will the hon. Gentleman look at page 35 of the Financial Statement, where he will see particulars of all the items lent out at usury?

Mr. Smith: It is the invariable financial practice in this country that Budget surpluses are used for the purpose of reducing floating debt, and nobody has departed from that practice in recent years.
Let us get back to the Amendment moved by the hon. and gallant Gentleman the Member for Angus, South (Captain Duncan). The hon. and gallant Gentleman wanted to reduce the Income Tax, and he and his hon. Friends argued that that would leave more money in people's pockets�žas the hon. Gentleman the Member for Heeley (Mr. P. Roberts) said, "all along the line." Well, now, having got that money those people could do one of two things with it. They could either spend it, or they could invest it. But if they invested it, they would be using their own discretion. That is the essence of the argument of the hon. Member for Heeley. I am glad to see the hon. and gallant Member for Angus, South, nodding his head. The essence of their argument was that individuals should choose at their discretion the direction of individual investment. That is one thing that the Financial Secretary and the Chancellor of the Exchequer would not for one instant allow.
I did wonder, listening to their arguments, whether there was at last a revolt on the part of the business men against financial and other controls by the Government, because it looked like that. If this Amendment were carried, if this sum of money of £83 million this year were allowed to remain in the pockets of individuals, to that extent the employing and investing classes would be independent of bank overdrafts�žand at a time when the Government have instructed the banks to tighten up on overdrafts. Surely hon. Members knew they were not going to get a concession in this direction.
It is one of those curious little coincidences that the cost of this concession would be £83 million this year, and it just so happens that £83 million by simple arithmetic, is the extra cost of Treasury bills in a full year in consequence of the increase in the Bank rate. A year ago the cost of Treasury bills was 10s. percent. Now it is 2 percent. The difference is 1.81, and there are £4,400 million of Treasury bills outstanding now. If we multiply 1.81 by 44, we get £83 million�žthe extra cost of Treasury bills in a full year due to the increase in the Bank rate.
I hope the hon. and gallant Member for Angus, South, and the hon. Member for Heeley will reflect upon that. But for the increased Bank rate, they could have had this concession without loss of


revenue. If the hon. and gallant Gentleman the Member for Angus, South, wants to start a revolt by leading business men against the domination of finance, let him come to me, and I will help him and will give him a few ideas for his revolutionary proposal. He and I could make common cause.
The cleverest speech in the debate today was given by that accomplished practitioner of argument, the Financial Secretary, who devoted almost the whole of his time to pouring broadsides irrelevantly into my right hon. Friend the Member for Battersea, North (Mr. Jay), while ignoring the cogent arguments of the back-benchers on the other side of the Committee. There are two ways of looking at it. Most of my hon. Friends think that, if we were to leave all this £83 million this year in the hands of the well-to-do people, many of them would increase their expenditure on luxuries, such as hunters and packs of hounds, which are still going strong in my native Wiltshire. How do we know there would not be an increase in expenditure of that sort? That might happen.
Or it might be found, as the hon. Gentleman the Member for Hallam (Mr. Jennings) very clearly argued, that with more money in their pockets people would have the wherewithal to extend capital expenditure. I think that is a weakness of all their arguments, because it is the fact that since 1945 the physical increase in the capital expenditure of this country, measured as a diversion of labour and materials from the production of consumer goods, has been higher than in any corresponding period in the whole of our history; not higher merely in financial terms, but higher in physical terms, in labour, materials, and so on. That rather does undermine the one valuable argument which they have.

Mr. P. Roberts: Is not capital expenditure now beginning to fall off?

Mr. Smith: That may well be. It is more than a pity that that is so. That arises out of certain intrinsic weaknesses of the monetary system, into which I may not go without being out of order. I hope that the hon. and gallant Member for Angus, South, will be gallant in the literal sense, that he will push his

Amendment to a Division; and if he does, although I have grave reservations as to his arguments, I shall fortify his courage by going into the Lobby with him.

Sir Richard Acland: The argument that has been advanced in the Committee by hon. Members in favour of the Amendment does depend absolutely on there being this £80 million or so available to the Chancellor, and on there being, therefore, no longer an inflationary danger but a deflationary danger confronting us. There could be hon. Members on the other side of the Committee who would agree that that is part of the argument put forward for this Amendment. We may concede that the Chancellor is in a position to make an £80 million or so concession.
The question then would clearly arise whether the proposed concession is the wisest one to make from the point of view of incentives to production. The question of incentives to production involves many considerations which cannot be altogether resolved by scientific or statistical data. It is a matter of opinion, to a larget extent�ža matter of one's feeling about the general sentiment of public opinion.
It seems to me that the very great difference of principle which divides hon. Members on this side of the Committee from those on the other is that we on this side have the feeling that British production depends upon the co-operation of a team which consists of some 20 million or more working men and women. We tend to look at the team as a unit and to consider what would be best to increase the total output of that total team. From that point of view a sense of insecurity, a sense of injustice, and a sense of anxiety are all things which will reduce the total output of the team.
Hon. Members opposite, on the other hand, look at our working population, not as a single team, but as 20 million or more of separate individuals. Therefore, they consider what is to be done to increase the output of each individual considered as an individual. From their point of view it may be that a certain amount of social injustice, a certain amount of a sense of anxiety, a certain amount of a sense of insecurity, far from reducing the output of the team,


as we think, would tend to increase the output of each individual by stimulating him to work harder in order to overcome anxiety and to escape from insecurity. It may be that it is for that reason that they have put forward this Amendment.
I should like to correct one point made by my hon. Friend the Member for Stechford (Mr. Roy Jenkins). He said that the Amendment, if carried as it is, would not have any effect upon the rate of tax paid by those in the lower tax bands of 3s. in the £, 5s. in the £, 7s. 6d. in the £. Of course, if the Amendment were carried, it would affect even tax in the lower bands because concessions in the lower bands are worked out as a proportion of the standard rate. They are expressed in terms all relating to thirteen-nineteenths of the standard rate.
The difficulty would be that whereas thirteen-nineteenths of 9s. 6d. works out at 6s. 6d., leaving the taxpayer to pay only 3s. on his first £50�žor, under the Chancellor's proposals, on his first £100 �žthirteen-nineteenths of 9s. is heaven knows what. It is a most awkward sum to deal with, and it would make necessary a large number of consequential Amendments in order to prevent all sorts of people in Income Tax offices from having the most frightful headaches.
When one says that this affects people in the lower Income Tax groups, it is really a question of how much. A man with £12 a week and three children would be benefited to the extent of 5s. and a man with £10 a week and two children to the extent of 2s.�žwhereas a man earning£50 per week would be benefited to the extent of £50 or £60 and, if he earned £10,000 a year, to the extent of at least £250. I think that such changes would increase the sense of social injustice and thereby act, not as an incentive, but as a disincentive to an increase in productivity of our whole working team.
I am glad to have an opportunity of opposing this Amendment, because if it had been in order I should have put down an Amendment to suggest that the rate of Income Tax should be increased. In that sense I should like to offer a few arguments against the proposal that it should be reduced. I hope that the wide latitude which has been afforded to other hon. Members will allow me to say that my suggestion�žwhich I should like the

Financial Secretary to consider between now and the next Budget�žis not simply to increase the rate of Income Tax and leave it at that. I should like to see the rate increased in order to increase the child allowances and family allowances and in order that there may be an opportunity of considering an allowance for the first child. I regard all those proposals�žan increased rate, bigger child allowances in the Income Tax provisions and larger family allowances, including family allowances on the first child�žas being of a single totality.

The Temporary Chairman (Mr. Bowles): I think the hon. Baronet is going too far. He cannot argue an increased rate of tax on an Amendment seeking to reduce the rate. The other matters he mentioned were also out of order.

Sir R. Acland: May I, nevertheless, point out what seems to me to be an injustice involved in the present Income Tax rates�žan injustice which would be increased by the proposal which has been made by the hon. and gallant Gentleman the Member for Angus, South? As I go round my constituency, meeting people, calling at people's houses and, from time to time�žas is the case with all hon. Members�žbeing asked in for a talk about things in general, one thing strikes me very forcibly. There is an enormous difference in the financial circumstances of those families which have two, three, four or five children below school age and those families with two or three of those children who have passed school age and are beginning to earn money.
5.45 p.m.
I think we ought to look at the very great difference in prosperity which comes to a family as children leave school and go out to work. Just before the children go out to earn money, the family is in the gravest possible financial difficulties in all the middle and lower levels of wage earners; whereas three or four years later, when those children are going out and earning their living, the family becomes much more affluent. It may be that, on the whole, our people prefer to go through periods of very great financial stringency in order to get into periods when they are a little better off; but I should have thought that a certain amount of evening out of the difficulties,


so that families with children would find things a little easier than they do now�ževen though it would mean that families where the children had started wage earning might find things a little harder�žwould have been a wise direction for Income Tax policy to take over the next few years.
I have been looking with some care at the Income Tax tables which were so kindly printed for us and which show the different sums paid by different people at different income levels and with different numbers of children. It seems to me that the proposals put before the House by the Chancellor of the Exchequer in his Budget and this Finance Bill moved, on the whole, in a wrong direction. It is very difficult to take a typical family. There is no such thing as an average family but one can compare two individual families which are representative of a certain group.
For this purpose I have been looking at the case of two families, one consisting of a father and mother with three children who are aged 15, 13 and 11 years respectively, so that all the children are at school, and another family of the same pattern with all the children four years older, that is to say, 19, 17 and 15 years old. I do not think it is utterly unreasonable to assume�žit would not be utterly unreasonable in my constituency�žthat in the case of the family with children aged 19, 17 and 15 years, the boy of 19 years might be earning £5 a week and the boy of 17 might be earning £4 a week. I have considered the head of the family in each case earning different sums per week, and I have tried to find out the effect of the Chancellor's Budget on these two different families.
If the head of the family is earning £8 a week�žand I agree with the Financial Secretary that one must take into account the increase in family allowances as well as the changes in Income Tax�žthe Chancellor's proposals benefit a family which has all its children at school to the extent of £15 per year. That is simply the increase in the family allowance for two children. If the head of the family is earning £8 a week and he has two children earning £5 and £4 a week respectively�ž—

The Temporary Chairman: I did warn the hon. Baronet previously that

he must relate his speech to the Amendment which is before the Committee and must not go into details of family or other allowances which are included in the Budget.

Sir R. Acland: I will do my best, although I am sorry if I cannot give these figures as showing how even present arrangements with regard to Income Tax, children's allowances and family allowances are weighted now against the family which has a large number of children and which would be made worse off if the rate of tax were reduced. I am not quite sure whether you, Mr. Bowles, were in the Chair, or whether it was your predecessor, when the Financial Secretary, in answer to the right hon. Member for Battersea, North, made a considerable point in saying that one could not really get a clear picture of the situation without a passing glance at family allowances. The right hon. Member for Battersea, North, was permitted to argue that, in order to get a fair view of the picture, one ought to take account of the way in which prices have been allowed to rise by the reduction of the food subsidies.

The Temporary Chairman: I have been here the whole afternoon, and if the debate has been allowed to go fairly wide by my predecessor, I cannot narrow it, but I must stop it from getting any wider, and the hon. Baronet must confine himself to a passing allusion to family allowances.

Sir R. Acland: I quite agree. I will refer to family allowances where they only come into the picture in a rather indirect manner. The family where the wage earner is getting £12 a week and has all his children at home will receive an advantage from this Budget of something like £13 a year, taking into account all family allowances; whereas when the children are all out and earning and the average income of all the members of the family would be £4 a week or just over, as compared with £2 a week when there was only one wage earner—�ž

The Temporary Chairman: The hon. Baronet must confine himself to the Amendment and not go into the details of family allowances and of particular wage earners earning £4 or £6 a week. It


is not a question of a particular individual's Income Tax and whether it should be reduced or not.

Mr. S. Silverman: On a point of order. The Committee is being asked to approve a proposal to distribute £88 million or £100 million of revenue among certain people. Surely it is competent for an hon. Member to argue that such a proposal is inequitable or undesirable having regard to the present position; and providing that one does not go into too great details or argue the merits or demerits of the personal position, surely it is competent to remind the Committee of what is the present position in order to discuss how far it would be desirable to continue it.

The Temporary Chairman: I think that the hon. Baronet was going into too much detail. I think that a passing reference to these and other allowances is in order, but not in anything like the detail in which he has been going into them. I therefore ask him to confine himself much more closely to the Amendment.

Sir R. Acland: Your predecessor in the Chair, Mr. Bowles, intimated that this was an Amendment on which we could have a rather wide discussion of the present position of the Income Tax and children's allowance structure and on the subject of incentives, and therefore, if one wanted to make a contribution which covered one or other of these points, this would be the time to put it forward.

Mr. Jay: Perhaps I can help the hon. Baronet if I submit to you, Mr. Bowles, that incentive in connection with Income Tax has been within the ambit of this debate, and I should have thought that the hon. Baronet would have an opportunity to refer to children's allowances and family budgets on the next Amendment to be called.

The Temporary Chairman: I had that in mind. The right hon. Gentleman has an Amendment to Clause 11 on which, I think, it might be more convenient to discuss the detailed arguments which the hon. Baronet is putting forward now.

Mr. C. E. Mott-Radclyffe: Some of us hoped to catch your eye, Mr. Bowles, on the general question of incentives on Clause 11 and I take it that we should not be ruled out of order if we

raised the question of incentives on that Amendment, if we are fortunate enough to catch your eye.

The Temporary Chairman: I may not be in the Chair myself, and I cannot bind my successor.

Sir R. Acland: I will put this in quite a general way. I think that an examination of the Income Tax tables shows that where there are families of two or three wage earners, the average income per head is much higher than the average income per head in those families where there are a large number of dependent children, even taking account of family allowances, and it will be found that the benefits conferred on the more affluent families are greater than those conferred on those who are less affluent.
I think that is taking us in a wrong direction, and to reduce the standard rate of Income Tax would have the effect of taking us further in that wrong direction, and it would be a much greater step towards social justice and towards a general sense of security amongst our population as a whole to go in the exactly opposite direction by increasing the rate of tax, so as to increase children's allowances and family allowances. This, of course, would affect adversely those families which have no dependent children and have several wage earners in the family, but it would act beneficially in regard to those families which have a large number of dependent children; and those are the families which, in my view and my experience of calling from door to door, are at this moment feeling the tightest pinch arising from the financial stringency of our country.
That is why I am glad to know that the Government are going to reject this Amendment, but I would commend to the Chancellor, during the year, if the Government should remain in power during the whole of the year, or, if not, to any other Chancellor of the Exchequer, that he should do the exact opposite of what is suggested in the Amendment before us.

Captain Duncan: We have had a very long discussion, and I have no desire that this Amendment should take up further time, so I beg to ask leave to withdraw it. I could, however, say a tremendous lot more about it if I wished to.

Several Hon. Members: Several Hon. Members rose—

The Temporary Chairman: At least four hon. Members have got up, and, therefore, I must rule that the hon. and gallant Gentleman has not the leave which he sought to withdraw the Amendment.

Mr. Keenan: If I can, I will get back to the Amendment before the Committee. If I remember aright a similar Amendment was put down last year by the Opposition to reduce the Income Tax by, I think, 6d. I think that the Financial Secretary had something to do with that, and I remember taking part in that debate myself. I am rather concerned because it is suggested that if the Amendment were agreed to it would represent a sum amounting to £83 million.
6.0 p.m.
I remember that last year when this matter was under discussion the Government then said that the cost of this concession would have been £80 million. That indicates that the position of those people for whom relief is being sought has not deteriorated but is improving. That is borne out by the fact that if the Government gave way on this point it would cost them more than that amount of £80 million. The mover and seconder of the Amendment stressed the point that if this concession were granted it would provide not only an incentive but an increase in purchasing power to those who would get the benefit of the reduced taxation. The implication was that this would be a further opportunity for those who would benefit to indulge in an orgy of purchasing textiles.
I agree with the hon. Baronet on this point. I am not satisfied that taxation, even though Supertax is 19s. 6d. in the £, is sufficiently high when we take into account the amounts which are retained by some people even after paying that high rate of taxation. I submit that it is asking too much to ease the burden of taxation on people earning £1,000 a year or more, which is what this Amendment seeks to do. It is an indication of what those who tabled the Amendment think about the position.
I noticed at the time of the Budget that they were not concerned about the reductions in subsidies which robbed people of a certain amount of their income and reduced the standards of the workers. The amount involved there is £160 million. In spite of that, it is sug-

gested that £83 million should be found to make a further present to those who are the best off in the community.
I am rather surprised at the reply from the Government benches. I think the Financial Secretary let his friends off very lightly. I know that he was implicated last year, as he has been for many years, in an attempt to make the then Government agree to a proposal similar to this. But if there were a Division upon this Amendment I can assure him that, in spite of his attitude last year, I should not be deterred from supporting the Government in the Division Lobby on this point.

Mr. Boyd-Carpenter: I hope the Committee may be prepared to make a little progress. We have had a very interesting debate, not only on the strict subject matter of my hon. and gallant Friend's Amendment, but also on the wider issues which you, Sir Charles, in your wisdom, ruled that we might be allowed to discuss with this Amendment as a kind of peg on which they might be conveniently suspended.
We have a good deal of business to transact, and my hon. and gallant Friend is not anxious to detain the Committee unduly. We have a good many Clauses ahead of us and a good deal of business to transact, and, while I am sure that any further contributions which might be offered would be of value and assistance, I wonder whether hon. Members appreciate, as they will if they look at the Order Paper, the further agreeable opportunities which still lie ahead of them, and whether they would, therefore, be prepared to deal with this Amendment now.
I am emboldened in that request by the fact that my hon. and gallant Friend has indicated that so far as he is concerned he is prepared to seek the leave of the Committee to withdraw the Amendment. He was not, in fact, granted permission by the Committee, but I would submit that, so far, we have succeeded in making reasonable progress without undue inconvenience to anybody and I hope that this agreeable atmosphere may continue. As the majority of speeches have been made against the Amendment and the mover has indicated his willingness to withdraw it, perhaps we might be able to make further progress. I am glad to say that the absence


of one hon. Member, other than the occupant of the Chair, does not inhibit the Committee from doing what in its wisdom it wishes to do.

Several Hon. Members: Several Hon. Members rose—

The Chairman: Surely the Committee is now ready to come to a decision. We have had two and a half hours' debate on this Amendment.

Mr. R. T. Paget: I have not intervened in this debate before. Sir Charles, and, in spite of the attractive plea which we have had from the Financial Secretary, perhaps I may be spared five minutes in which to make a point which I have been seeking for some time to make.
The suggestion in support of this Amendment was that it would provide an opportunity for saying, "Part of the money might be saved, but if the Amendment is accepted the whole of it is saved, because the Budget surplus is saving and is investment." My criticism of this Budget is that I think it is desperately inflationary. It is somewhat naive of the Chancellor to ask, as he did over the weekend for wage restraint from the trade unions when he has done everything in his Budget to provoke those wage demands. If he had proposed not merely to deflate bat to keep the inflationary position level, he would have had not merely to maintain the rate of Income Tax but to increase it a good deal. To accept this Amendment would be a desperately inflationary Act.
One of the devices which the right hon. Gentleman has been adopting has been to cut down investment which has been running since the war at a much higher rate than ever before in our history. But that cutting down of investment is cutting down future production. To get out of his temporary difficulties he has been eating the seed core. That is why this Budget is so improvident, and already its consequence is that the production which has saved us from one difficulty after another by steadily increasing year after year has stopped increasing. Production figures have not gone up this quarter as they have every other quarter since the war.
I appeal to the Chancellor not merely to resist an Amendment of this sort, as I feel sure he will, but to say whether he does not think that something serious

has to be done to regain the level of investment and to build up production which he is losing.

Mr. Chapman: I also promise to be brief not only because of the time and the amity in which these discussions have proceeded, but also because I fear that my voice will not carry for more than a few minutes.
I wish to refer to the speech of the Financial Secretary in resisting this Amendment and the remarks of my right hon. Friend the Member for Battersea, North (Mr. Jay). The argument so far on the whole question of incentives has been that we were resisting this further concession to the higher Income Tax payers on the ground that already they have had enough out of this Budget and probably too much. The Financial Secretary said that in these circumstances, when we look at the lower income levels, we must take into account not merely the alterations in Income Tax but also some of the compensating social benefits that would arise from the Budget.
I want very briefly to look at that problem within the general context of incentives. The Financial Secretary said, in effect, that it was quite wrong to argue that the Income Tax reliefs given so far were disincentives in the sense that they were transferring from those least able to pay to those who could most afford to pay Income Tax. Let us look at the position of a man with £9 a week. It is already a fact that he has not got anything out of this Budget, and if this Amendment were accepted his position would be even worse relative to the whole of the rest of the Income Tax paying population.
A man with £9 a week and a family is at present getting out of this Budget one single relief, which is 3s. a week for the second child. He is losing 6s. a week which he is paying in increased cost of food—four people at 1s. 6d. per head; and he is getting no relief of Income Tax because he does not pay any. He has also to pay the increased cost of bus fares and of clothing under the D scheme. He is getting a total relief of 3s. and to set against that he is losing 6s. in food subsidies and extra shillings because of other factors.
It is, therefore, true—and the Financial Secretary is misleading the Committee in


this matter—to say that even when the social benefits are taken into account hundreds of thousands of people, perhaps millions, including clerks, distribution workers, railway workers and people like that, who have between £5 and £9 a week, are, in effect, paying for the increased Income Tax reliefs for those with over £1,000 and £2,000 a year. That fact cannot be sufficiently stressed. The Financial Secretary got away with it too easily by saying that the social benefits had to be taken into account, for he did not take them in account at all but ran away from the whole problem.
To the person with £8 or £9 a week these reliefs make no difference. The conclusion that we on this side of the Committee have reached is that there has already been a re-distribution of purchasing power away from these lower paid workers—through the cut in the food subsidies and the alteration of Income Tax which they do not pay anyway-and that their position would be even worse through this Amendment.
Finally, I should like to say a word in reply to the arguments of the hon. Member for Heeley (Mr. P. Roberts). He was anxious that the Income Tax rate should be reduced to expand purchasing power and thus avoid the incipient deflation facing some industries. Has he reflected precisely what his proposals will mean? The industries which are on the verge of deflation are the textile industries, those engaged in the manufacture of boots and shoes, and similar consumer goods.
I am quite sure that the effect of this Amendment, were it carried, would be to release the larger amounts of purchasing power mainly among the rich. It would not really affect the class of consumer goods which is suffering through deflation, but would bring increased demand in those industries which do not so much need help. Through its effect on profits of industry, it would result in a heavier demand for more capital goods at a time when the Government are seeking to get more capital goods exported, when they are cutting the level of investment, and altering initial allowances. The whole effect would not be anti-deflationary in the industries that need that help. It would be those other industries which do

not need such help and it certainly would not be in the national interest at this moment.

Amendment negatived.

Motion made, and Question proposed. "That the Clause stand part of the Bill."

6.15 p.m.

Mr. Ian Horobin: I shall not detain the Committee for more than a minute or so, but we have the Chancellor here and I want to make one observation to him for his consideration between now and next year. It has to do with the accounting which has already confused the Committee and which is known as below the line expenditure. The reason why we have to raise this enormous sum of Income Tax is tied up with the hundreds of millions of pounds, and, in particular, the £300 million which my right hon. Friend takes from the taxpayer and lends to the local authorities. That had to be done in the days when we had different interest rates because, otherwise, they would not get the money.
My right hon. Friend has most courageously and in timely fashion put that matter right, and it should be urgently considered now whether the local authorities should not take their place in the queue and borrow money from the public at the market rate. As soon as that is done it will no longer be necessary for him to raise these very large sums which have added so greatly to his difficulties. Nothing can be done this year, but the improvement in the rate of interest charged gives him the opportunity, before the next Budget, of bringing a very desirable additional weapon to his aid in making his monetary policy effective, and at the same time, reducing taxation at this point.
I do not press this now, but I earnestly hope that between now and the next Budget my right hon. Friend will look into the whole question of a return to the earlier, saner policy in these matters which he has shown his willingness to do, to the advantage of the taxpayer and the industries of this country.
Question put, and agreed to.
Clause ordered to stand part of the Bill.

Clause 11.—(ALTERATIONS IN EXISTING PERSONAL RELIEFS, ETC.

Mr. Hugh Dalton: I beg to move, in page 14, line 16, after "to," insert":
one hundred pounds in respect of the first child and for each subsequent child.
We would be glad to know what are the feelings of the Government about priorities here. We are not sure that their judgment on priorities, which they have shown in their proposals, is right. Before the war the child allowance was £60 a year, which can be taken to be the equivalent of £120 a year now. It was reduced during the war to £50 and it was increased by me to £60 for the year 1947–48 and to £70 by my right hon. Friend the Member for Leeds, South (Mr. Gaitskell), for the year 1951–52. We are glad that the Chancellor proposes now to raise it to £85, but even so, if my estimate is correct, it is still worth substantially less to a parent than was the pre-war £60 a year. We are therefore proposing that it should be further raised to £100.
We are accepting, as they are not debatable at this stage or on this Clause, other features of the financial policy of the Government, including what we take note of, the rise in the cost of living because of the food subsidy cut. This has borne with exceptional hardship on families containing a large number of young children. The effect of the change which I am proposing would be to relieve a substantial number of such families who fall just within the limits of tax liability, as redefined this year, and perhaps to relieve them of tax altogether.
I can think of no class more deserving of complete relief than that class of family with a number of small children. Since we are discussing the child allowance which operates flatly right up the scale, I appreciate that the effect of the Amendment would be to give relief, in proportion, to the richer parents of considerable families, but that is inevitable within the field which we are now considering.
I do not know whether the Chancellor has read a leading article in "The Times" this morning, in the course of which the writer says, talking of the Family Allowances and National Insurance Bill, that both the Government and the Opposition alike—

have shown themselves unhappily aware that policy since the Beveridge Report has increasingly favoured the claims of the elderly and under-emphasised those of the dependent family; and the present Bill carries this process a step farther.
We do not grudge what has been done for the elderly, but we feel that this is a moment when we should also emphasise the needs of the dependent family, particularly those in which there is a substantial number of young children. I should be glad if, in due course, we could have the Government's view of this matter.

Mr. Douglas Houghton: I saw the Parliamentary Secretary to the Ministry of Civil Aviation make a move just now, as though to reply. I hope that the Amendment has nothing to do with civil aviation. Nor do I think that it is a flight of fancy which can come within his province as Parliamentary Secretary for Civil Aviation. Although there is novelty in the suggestion made in the Amendment of a higher child allowance for the first child, it is by no means an unusual feature in the history of child allowance for Income Tax purposes.
The Amendment seeks to distinguish between the amount of child allowance for the first child and for all subsequent children. The increase proposed is from £85 to £100. Before 1935–36, the allowance for the first child was higher than for subsequent children. In that year it was made uniform for all children. The subsequent introduction of the family allowance scheme seems to add point now to the case for distinguishing favourably between the first child and subsequent children. We propose that the £15 additional allowance for the first child shall yield for those who are paying tax anything between £2 5s. and £7 2s. 6d. a year, over and above the higher child allowance which the Chancellor proposes and which is contained in the Clause.
I doubt whether, even with the combination of tax allowances and family allowances, the margin between the single person or the childless couple and the family man is yet wide enough. Take as an example a single man getting £7 a week and a married man with three children and getting £7 a week also. In the case of the single man, his take-home pay after tax deduction is £6 8s. 4d.


The take-home pay of the married man is his gross wage, which is exempt from taxation owing to the operation of the allowances, plus family allowances amounting to 16s. The single man takes home £6 8s. 4d. and the married man with three children takes home £7 16s., a difference of 27s. 8d. per week.
I can give other examples to show that even at £10 a week the margin between the single man and the married man with three children, after taking account of family allowance and taxation, is only just over £2 a week. I think that the Chancellor will agree that this gap could be widened more suitably by improved child allowances for taxation purposes than in any other way.
The Chancellor saw fit in his proposals to increase the personal allowance to single persons as well as to the married. Last year, my right hon. Friend the Member for Leeds, South (Mr. Gaitskell) proposed to increase the married man's allowance but not the single person's allowance. That was an attempt to lighten the burden of taxation for the family man while not giving a corresponding relief to the single person. I hope the Chancellor will feel that our present proposal is not unreasonable.
As to the cost of it, my own estimate, for what it is worth, is about £5 million a year, a large sum I have no doubt, having regard to other concessions the right hon. Gentleman has made, and to concessions that he will no doubt feel called upon to make during further stages of the Bill. I hope that he will see the case for differentiation. If he can accept the Amendment he will be twice blessed by all the family men who are taxpayers, who welcome the relief already given but are still looking for more.

The Parliamentary Secretary to the Ministry of Civil Aviation (Mr. R. Maud-ling): As the hon. Member for Sowerby (Mr. Houghton) has just said, the Amendment is not an instruction to the Civil Aviation Department. I noticed in the Press that the right hon. Member for Leeds, South (Mr. Gaitskell) whose name heads the Amendment, is not present with us because he is grounded in New York, but that is not the responsibility of the Minister for Civil Aviation, so far as I can see.
The purpose of the Amendment is to extend from £85 to £100 the child allowance only to the first child, a fact that I did not find apparent in the speech of the right hon. Gentleman who moved it. It is, as the hon. Member for Sowerby said, no innovation in our taxation to have different allowances as between the first child and subsequent children, and there is a certain amount of strong reasoning behind it. Those of us who are parents know that the first child is the most expensive. We can pass on some of the first child's clothes, and the pram, to the second child. When the first child whimpers, we send for the doctor. When the next child bellows, we say that that is good for its lungs.
6.30 p.m.
There are solid, sensible reasons for differentiating between the first and subsequent children. There were varied differentiations between 1919 and 1935, when the then Chancellor decided to cancel the differential and to increase the rate for subsequent children to that of the rate for the first child on grounds of social policy. He maintained that with the need to increase the birth-rate it was desirable not to perpetuate the distinction between the first and subsequent children. That reason which held good in 1935 still holds good today to a considerable extent.
The hon. Member also referred to family allowances. It is true that the increase of the family allowance applies only to the second and subsequent children, and that the parents with only one child gain no benefit. Again, some people argue strongly that we should extend the family allowance to the first child, but there are weighty reasons on the other side of social policy and cost and my right hon. Friend has made it clear that he cannot do this.
This Amendment would do precisely what hon. and right hon. Gentlemen opposite have been upbraiding us for doing. It would give higher benefits the higher we go up the scale of income. The family allowance is subject to tax. The person who does not pay Income Tax gets the full benefit of 3s. a week or 156s. a year. The person who pays at the surtax rate gets a much smaller benefit. The effect of this proposal would be precisely the opposite. It would mean that the larger the income the greater


would be the benefit. The person drawing the greatest benefit would be the person paying the full rate of standard tax and he would get £7 17s. 6d. a year. Today, the right hon. Gentleman the Member for Battersea, North (Mr. Jay) was angry with us for giving the same to the man with an unearned income of £10,000. This Amendment would give him another £7 17s. 6d., which is a little inconsistent with the line that has been taken by hon. and right hon. Gentlemen opposite.
The strongest argument against this Amendment is its cost. I am advised that it would cost £8 million this year and £10 million in a full year, which is a very large sum in addition to the concessions already made. The right hon. Gentleman who moved the Amendment laid stress, very properly, on the importance of assisting families with small children. He referred to the excellent article in "The Times" this morning. It should be pointed out, however, that the increase in the child allowance this year is £15 compared with the previous increases of £10. So my right hon. Friend has already taken a substantial step in the direction of helping the family in this matter.
Another point to bear in mind is that the Royal Commission on Taxation, established under the previous Administration, is considering these matters. For the moment, therefore, we can only look at present conditions because it is not possible or desirable to rule out any future increases in child allowance. In the present year, however, on the grounds of cost and because the Royal Commission is considering all these matters of allowances, I ask the Committee to reject the Amendment.

Mr. John McKay: The policy of this Government has been to take away the subsidies and that has directly increased the cost of living. They have tried to console the country by their policy in regard to family allowances. They have argued that, when they increased the family allowances for the second child and all other children from 5s. to 8s., they mitigated the hardship imposed on the people of this country, and particularly on the family man.
But by their policy the Government have laid a penalty upon the married man with one child who is not paying

Income Tax because of his low wages. The Chancellor of the Exchequer is supposed to be a fair and just man. I suggest that he is not being just, and he knows that he is not being just, because in the policy he has adopted in regard to the family allowance scheme he is giving no benefit to the married man with one child.
This Amendment introduces a new policy, an extra allowance for the first child. I agree that it is simply extending the policy of the Government by giving more relief to the people who are paying Income Tax and, to that extent, to those who are in a better position than the lower-paid worker. Unfortunately, as I have said, the lower-paid worker has had increased liabilities imposed upon him by the policy of this Government.
The question then arises whether there is any justice in the claim that we should do something for the first child. I do not believe that family allowances increase the birth rate, because the incentive is not sufficient to outweigh the liability. The family allowance scheme is merely a small financial help to the family man who has more liabilities than other people. Therefore, in justice and on moral grounds, because this is a question merely of helping the family man because of his greater liabilities, the Chancellor ought to consider the question of the first child, although in a different way, perhaps, from that suggested in the Amendment.
The Government should go once again into the question of overcoming the penalties that they are imposing upon the family with only one child. An analysis of the figures which have been given in answer to questions on family allowances and other subjects shows that there are 4,480,000 children in respect of whom the present 5s. is paid. The number in the "first child" category is about 6,300,000. Even though some of the families concerned are receiving allowances for subsequent children, there is nevertheless a very large number of families with only one child, and something ought to be done by the Government to meet the liability of these families upon whom penalties have been placed.
I do not pretend to be a statistician, but elementary arithmetic will show that


if 5s. were paid for every child, the cost would be £145 million as against the £102 million which is proposed by the Bill. Surely, there is some way of helping the one-child family without imposing such a penalty upon them.
I should like the Government to consider the justice of our claim and to see whether the whole family allowances question could not be modified by giving, say, at least 3s. for the first child, 5s. for the second child and 8s., which is the figure proposed in the Bill, for third and subsequent children. We are already paying £63 million to meet the existing 5s. payment. If 3s. were paid for the six million-odd first children, the cost would be £49 million. As far as the second child is concerned, the cost would be no greater than at present and I calculate that the total extra cost of paying the 3s., 5s. and 8s., as I have suggested, would be only about £24 million.
That is a lot of money. The Amendment, however, would involve only an increase of £10 million. I put forward my claim for the one-child family for the Chancellor to consider its justice.

Mr. R. A. Butler: I should very much like to help the hon. Member if I were able to do so in the Bill, but these matters relate largely to the Bill dealing with social insurance, which is to be discussed on another day. Therefore, I am unable to help or to answer him on matters affecting social insurance. I cannot add to the reply given by my hon. Friend the Parliamentary Secretary to the Ministry of Civil Aviation, because the Bill deals only with families coming into the Income Tax scale.

6.45 p.m.

Mr. McKay: I agree with the right hon. Gentleman. At the same time, however, it was because of the amount that he allocated that family allowances could be increased under the Bill which deals with social insurance. All that needs to be done is to increase the Exchequer contribution to meet any Amendment that may be proposed.
The Chancellor's policy has placed a direct penalty upon the one-child families, who are not being helped by his family allowance scheme or by his Income Tax reliefs. He could meet our case if he wished to do so, and upon him must rest

the blame for not helping these families with their liabilities.

Mr. W. W. Astor: I do not propose to follow the hon. Member for Wallsend (Mr. McKay) into everything he has said, but I should like to say a word from this side in support of the principle of the Amendment. It is a sad thing that today these allowances do not begin to cover the same amount of need as was covered by the similar allowances before the war.
My old schoolfellow the right hon. Member for Bishop Auckland (Mr. Dalton) made a very fair case, and I hope that next year, perhaps, we shall have some amelioration. Speaking as the father of a first child, and knowing the costs and how much greater they are today, whether for clothes or for education, compared with before the war, I think that there is a strong case for the Amendment. I hope that the hon. Member will realise that our hearts, if not our votes, are with him.

Mr. Jay: Although we were surprised to find the Treasury calling in help from the Ministry of Civil Aviation so early in the Bill, we have no objection to a change in the bowling, and so I am very glad to welcome the hon. Gentleman to our discussion. I do not, however, think that he did anything like justice to the strength of the Amendment, for which there is a very strong case indeed, and which we feel bound to press. He pointed out quite correctly that the acceptance of the Amendment by itself would be to give greater assistance to those higher up the income scale. That is the nature of the child allowance.
But we do not put our proposal forward as an alternative to assistance in other ways—by way, for instance, of the ordinary family allowances, of which my hon. Friend the Member for Wallsend (Mr. McKay) spoke, and on which I should not have ventured to speak at such length, as I should have been doubtful whether I should have been in order in doing so on the Amendment. My hon. Friend has, however, established the point that this is not an alternative, but is one part of the proposals which we would make to remove the difficulty arising from the fact that it is the large family, it seems to us, which is today most in need.
We have, both by our taxation arrangements, our ordinary income structure and our social benefits, to an extent which perhaps very few of us have realised, produced a rather extreme inequality between the family, on the one hand, which has a high proportion of earners and very few dependents, and the family, on the other hand, with perhaps only one earner and many dependents. A typical example of the latter case would be the family of a man with three, four or five children, whose wife very likely, simply because there are a number of children, is herself unable to earn. On the other hand, we have either the single man or the married couple without children, both earning—just because the wife has no children and is able to earn.
If we go into the figures, we find a remarkable discrepancy between the actual income per head available in those different families. I think that perhaps unintentionally in the last few years, by changes in Income Tax, made for very well meaning reasons, we have actually accentuated that inequality, for instance, by increasing the wife's earned income allowance, which stands at £110 compared with £45 before the war, whereas the child allowance only stands at £85 compared with £60 before the war. I suspect that it is these families, consisting of married couples each of whom is earning, who can spend money on cinemas, etc., which have been put forward as a reason for saying that people can spend more on food and necessities. That is not a sound argument because they are probably quite different families.
I wish to illustrate the point by giving one or two other figures, which I think are relevant to the controversy on equal pay as well as to the controversy on this Amendment. What determines the standard of living is, after all, not the net income per family or household but the net income per head. That actually determines the individual's standard of living; but it is a figure at which we seldom look. Perhaps I might supplement the figures which have been given and take two cases, the £10 a week level and the £20 a week level. In these figures I have included family allowances. A single man, without any dependents, earning £10 a week takes home £8 14s. approximately in net income per head.

If he is married and his wife is also earning the same sum, they have a gross income of £20 a week, and the net income per head is very little less, something like £8. But, if the same man is married and has three children and his wife cannot earn for that reason, the net income per head for that family is £2 3s. against £8 14s.—or about a quarter, a very remarkable difference.
At the £20 a week level the single man is left with £15 5s. That is the income per head for him; whereas if he has a wife and three children, his income per head is down to £3 12s. which is again about a quarter. It is clearly impossible by Income Tax to produce a situation in which the income per head will be the same if one has four, five or six children, although in France they have a family allowance system, I believe, by which they almost achieve that. That would be vastly expensive, and beyond anything we could propose; but I do suggest these figures show that we have gone too far in the other direction. There is a very remarkable inequality between the family with few dependents and the family with a number of dependents.
It may be that in last year's Budget, on further consideration, we made a mistake in that sense by increasing both the child allowance and the married allowance. It would, of course, have been possible, as an alternative, not to have increased the married allowance, but to have increased the child allowance by more. That would benefit the needy family more effectively. But the remarkable thing is that the Chancellor this year has increased the married allowance by more than the child allowance—

Mr. Maudling: And he has increased the family allowance.

Mr. Jay: Yes, but I am now arguing that in the structure of Income Tax there is an unbalance between the different types of families. It seems to me that there is a strong reason for making a change; and I wish to quote one other sentence from the leader of "The Times" this morning from which my right hon. Friend quoted:
Without going to the extremes of the French, there is still room for a substantial improvement in the family's social income, as a means both of remedying the inevitable disregard of family needs by the wage system"—


which is, of course, the source of the problem—
and of eventually securing the general introduction of equal pay, which all parties now desire.
That seems to be a good summing up, and I commend it to the Committee.

Captain Robert Ryder: If the Government are unable to accept the full measure of this Amendment, I wonder whether I could ask them to consider the case of the widow with children? These people are, I believe, among the more hard-pressed sections of the community deserving special interest. By what seems a freak of this personal

allowance, a widow with one child has to pay a higher rate of tax—

The Chairman: I think the hon. and gallant Member is going wide of the Amendment; this is nothing to do with the Amendment.

Captain Ryder: I was speaking about the personal allowance.

The Chairman: This Amendment is a quite simple one If the hon. and gallant Member will look at the Bill, he will see what it does.

Question put, "That those words be there inserted."

The Committee divided: Ayes, 206: Noes, 227.

Division No. 136.]
AYES
[6.58 p.m.


Acland, Sir Richard
Evans, Edward (Lowestoft)
MacColl, J. E.


Adams, Richard
Ewart, R.
McGhee, H. G.


Albu, A. H
Field, W. J.
McInnes, J.


Allen, Arthur (Bosworth)
Finch, H. J.
McKay, John (Wallsend)


Anderson, Frank (Whitehaven)
Fletcher, Eric (Islington E.)
McLeavy, F.


Attlee, Rt. Hon. C. R.
Follick, M.
MacMillan, M. K. (Western Isles)


Awbery, S. S.
Forman, J. C.
MacPherson, Malcolm (Stirling)


Ayles, W. H.
Fraser, Thomas (Hamilton)
Mallalieu, J. P. W. (Huddersfield, E.)


Balfour, A.
Freeman, John (Watford)
Marquand, Rt. Hon. H. A.


Barnes, Rt. Hon. A. J
Gibson, C. W.
Mellish, R. J.


Bartley, P.
Glanville, James
Messer, F.


Bellenger, Rt. Hon. F. J.
Gooch, E. G.
Mitchison, G. R.


Bence, C. R.
Gordon Walker, Rt. Hon. P. C.
Monslow, W.


Benn, Wedgwood
Grenfell, Rt. Hon. D. R.
Moody, A. S.


Benson, G.
Grey, C. F.
Morgan, Dr. H. B. W.


Beswick, F.
Griffiths, David (Rother Valley)
Morris, Percy (Swansea, W.)


Bing, G. H. C.
Griffiths, Rt. Hon. James (Llanelly)
Morrison, Rt. Hon. H. (Lewisham, S.)


Blackburn, F.
Grimond, J.
Mort, D. L.


Blenkinsop, A.
Hale, Leslie (Oldham, W.)
Moyle, A.


Blyton, W. R.
Hall, Rt. Hon. Glenvil (Colne Valley)
Mulley, F. W.


Boardman, H.
Hall, John (Gateshead, W.)
Neal, Harold (Bolsover)


Bottomley, Rt. Hon. A. G.
Hamilton, W. W.
Noel-Baker, Rt. Hon. P. J


Bowden, H. W.
Hannan, W.
Oldfield, W H.


Bowen, E. R.
Hardy, E. A.
Oliver, G. H.


Braddock, Mrs. Elizabeth
Hargreaves, A.
Oswald, T.


Brockway, A. F.
Harrison, J. (Nottingham, E.)
Padley, W. E.


Brook, Dryden (Halifax)
Hastings, S.
Paget, R. T.


Brown, Rt. Hon. George (Belper)
Hayman, F. H.
Paling, Rt. Hon. W. (Dearne Valley)


Brown, Thomas (Ince)
Henderson, Rt. Hon. A. (Rowley Regis)
Paling, Will T. (Dewsbury)


Burke, W. A.
Herbison, Miss M.
Pargiter, G. A.


Burton, Miss F. E.
Holman, P.
Parker, J.


Butler, Herbert (Hackney, S.)
Holmes, Horace (Hemsworth)
Paton, J.


Carmichael, J.
Houghton, Douglas
Pearson, A.


Castle, Mrs, B. A
Hoy, J. H.
Pearl, T. F.


Champion, A. J.
Hubbard, T. F.
Poole, C. C.


Chapman, W. D.
Hudson, James (Ealing, N.)
Price, Joseph T. (Westhoughton)


Chetwynd, G. R.
Hughes, Emrys (S. Ayrshire)
Proctor, W T.


Clunie, J.
Hughes, Hector (Aberdeen, N.)
Pursey, Cmdr. H.


Cocks, F. S 
Hynd, J. B. (Attercliffe)
Reeves, J.


Coldrick, W. 
Irvine, A. J (Edge Hill)
Reid, Thomas (Swindon)


Collick, P. H.
Irving, W. J. (Wood Green)
Richards, R.


Cove, W. G.
Isaacs, Rt. Hon. G. A.
Robens, Rt. Hon A


Craddock, George (Bradford, S.)
Jay, Rt. Hon. D. P. T.
Roberts, Albert (Normanton)


Crosland, C. A. R.
Jeger, Dr. Santo (St. Pancras, S.)
Roberts, Goronwy (Caernarvonshire)


Dalton, Rt. Hon. H.
Jenkins, R. H. (Stechford)
Rogers, George (Kensington, N.)


Darling, George (Hillsborough)
Johnson, James (Rugby)
Ross, William


Davies, A. Edward (Stoke, N.)
Johnston, Douglas (Paisley)
Royle, C.


Davies, Ernest (Enfield, E.)
Jones, David (Hartlepool)
Schofield, S. (Barnsley)


de Freitas, Geoffrey
Jones, Frederick Elwyn (West Ham, S.)
Shackleton, E. A. A.


Deer, G.
Jones, Jack (Rotherham)
Shawcross, Rt. Hon. Sir Hartley


Delargy, H. J.
Jones, T. W. (Merioneth)
Silverman, Julius (Erdington)


Dodds, N. N.
Keenan, W.
Silverman, Sydney (Nelson)


Donnelly, D. L.
Kinley, J.
Simmons, C. J. (Brieriey Hill)


Driberg, T. E. N.
Lee, Frederick (Newton)
Slater, J.


Ede, Rt. Hon. J. C.
Lever, Leslie (Ardwick)
Smith, Ellis (Stoke, S.)


Edwards, Rt. Hon. Ness (Caerphilly)
Lindgren, G. S
Smith, Norman (Nottingham, S.)


Edwards, W. J. (Stepney)
Logan, D. G.
Sorensen. R W




Soskice, Rt. Hon Sir Frank
Turner-Samuels, M.
Willey, Frederick (Sunderland, N.)


Sparks, J. A.
Ungoed-Thomas, Sir Lynn
Williams, Rev. Llywelyn (Abertillery)


Steele, T.
Viant, S. P.
Williams, Ronald (Wigan)


Stewart, Michael (Fulham, E.)
Wade, D. W.
Williams, Rt. Hon Thomas (Don V'll'y')


Strachey, Rt. Hon. J.
Watkins, T. E.
Williams, W. R. (Droylsden)


Strauss, Rt. Hon. George (Vauxhall)
Webb, Rt. Hon. M. (Bradford, C.)
Wilson, Rt. Hon. Harold (Huyton)


Sylvester, G. O.
Weitzman, D.
Winterbottom, Richard (Brightside)


Taylor, Bernard (Mansfield)
Wells, Percy (Faversham)
Woodburn, Rt. Hon. A


Taylor, John (West Lothian)
West, D. G.
Yates, V. F.


Taylor, Rt. Hon. Robert (Morpeth)
Wheatley, Rt. Hon. John



Thomas, lorwerth (Rhondda, W.)
White, Hoary (Derbyshire, N.E.)
TELLERS FOR THE NOES:


Thorneycroft, Harry (Clayton)
Whiteley, Rt. Hon. W.
Mr. Kenneth Robinson and


Tcmney, F.
Wilkins, W. A.
Mr. Wigg.




NOES


Aitken, W. T.
Fraser, Hon. Hugh (Stone)
Maudling, R.


Alport, C. J. M.
Fraser, Sir Ian (Morecambe amp; Londsale)
Maydon, Lt.-Cmdr S. L. C.


Amery, Julian (Preston, N.)
Gage, C. H.
Medlicott, Brig. F.


Amory, Heathcoat (Tiverton)
Galbraith, Cmdr. T. D. (Pollok)
Mellor, Sir John


Anstruther-Gray, Major W. J.
Galbraith, T. G. D. (Hillhead)
Molson, A. H. E.


Arbuthnot, John
Garner-Evans, E. H.
Moore, Lt.-Col. Sir Thomas


Ashton, H. (Chelmsford)
George, Rt. Hon. Maj. G. Lloyd
Mott-Radclyffe C. E.


Assheton, Rt. Hon. R. (Blackburn, W.)
Godber, J. B.
Nabarro, G. D. N.


Astor, Hon. J. J. (Plymouth, Sutton)
Gomme-Duncan, Col. A
Nicolson, Nigel (Bournemouth, E.)


Astor, Hon. W. W. (Bucks, Wycombe)
Gough, C. F. H
Nield, Basil (Chester)


Baker, P. A. D.
Gower, H. R.
Noble, Cmdr. A. H. P.


Baldock, Lt.-Cmdr. J. M
Graham, Sir Fergus
Nugent, G. R. H.


Baldwin, A. E.
Grimston, Sir Robert (Westbury)
Nutting, Anthony


Barber, A. P. L.
Harris, Frederic (Croydon, N.)
Oakshott, H. D.


Baxter, A. B.
Harris, Reader (Heston)
Ormsby-Gore, Hon. W. D.


Beach, Maj. Hicks
Harrison, Col. J. H (Eye)
Orr, Capt. L. P. S.


Bell, Ronald (Bucks, S.)
Harvie-Watt, Sir George
Orr-Ewing, Ian L (Weston-super-Mare)


Bennett, F. M. (Reading, N.)
Higgs, J. M. C.
Partridge, E.


Bevins, J. R (Toxteth)
Hill, Dr. Charles (Luton)
Peake, Rt. Hon. O


Birch, Nigel
Hill, Mrs. E. (Wythenshawe)
Perkins, W R. D


Bishop, F. P.
Hinchingbrooke, Viscount
Peto, Brig. C. H. M


Black, C. W.
Hirst, Geoffrey
Peyton, J. W. W


Boyd-Carpenter, J. A
Holland-Martin, C. J.
Pitman, I. J.


Boyle, Sir Edward
Hollis, M. C.
Powell, J. Enoch


Braine, B. R.
Holmes, Sir Stanley (Harwich)
Prior-Palmer, Brig, O. L


Braithwaite. Lt. Cdr. G. (Bristol, N.W.)
Hope, Lord John
Profumo, J. D.


Brooke, Henry (Hampstead)
Hornsby-Smith, Miss M. P 
Raikes, H. V.


Brooman-White, R. C.
Horobin, I. M.
Rayner, Brig. R


Buchan-Hepburn, Rt. Hon. P. G. T
Horsbrugh, Rt. Hon. Florence
Redmayne, E.


Bullard, D. G.
Howard, Gerald (Cambridgeshire)
Remnant, Hon. P


Bullus, Wing Commander E. E.
Hudson, Sir Austin (Lewisham, N.)
Robinson, Roland (Blackpool, S.)


Burden, F. F. A.
Hulbert, Wing Cmdr. N. J.
Robson-Brown, W.


Butcher, H. W.
Hurd, A. R.
Rodgers, John (Sevenoaks)


Butler, Rt. Hon. R. A. (Saffron Walden)
Hutchinson, Sir Geoffrey (Ilford, N.)
Roper, Sir Harold


Carr, Robert (Mitcham)
Hutchison, Lt.-Corn. Clark (E'b'rgh W)
Russell, R. S.


Cary, Sir Robert
Hylton-Foster, H. B. H
Ryder, Capt. R. E. D.


Channon, H.
Jennings, R.
Salter, Rt. Hon Sir Arthur


Churchill, Rt. Hon. W. S.
Johnson, Eric (Blackley)
Sandys, Rt. Hon D.


Clarke, Col. Ralph (East Grinstead)
Johnson, Howard (Kemptown)
Savory, Prof. Sir Douglas


Cole, Norman
Jones, A. (Hall Green)
Schofield, Lt.-Col. W. (Rochdale)


Golegate, W. A.
Kerr, H. W. (Cambridge)
Scott, R. Donald


Conant, Maj. R. J. E
Lambert, Hon. G.
Scott-Miller, Comdr. R


Cooper, Sqn. Ldr. Albert
Lambton, Viscount
Shepherd, William


Craddock, Beresford (Spelthorne)
Lancaster, Col. C. G
Simon, J. E. S. (Middlesbrough, W.)


Crookshank, Capt. Rt. Hon. H. F. C
Langford-Holt, J. A
Smithers, Sir Waldron (Orpington)


Crosthwaite-Eyre, Cot. O. E.
Law, Rt. Hon. R. K
Snadden, W. McN.


Crouch, R. F.
Leather, F. H. C
Soames, Capt. C.


Darling, Sir William (Edinburgh, S.)
Legge-Bourke, Maj E. A. H
Spearman, A. C. M


Deedes, W. F.
Legh, P. R. (Petersfield)
Speir, R. M


Digby, S. Wingfield
Linstead, H. N.
Spence, H. R. (Aberdeenshire, W.)


Dodds-Parker, A. D.
Lockwood, Lt.-Col. J. C
Spens, Sir Patrick (Kensington, S.)


Donaldson, Cmdr. C. E. McA.
Low, A. R. W.
Stanley, Capt. Hon Richard


Donner, P. W.
Lucas, P. B. (Brentford)
Stevens, G. P.


Doughty, C. J. A.
Lucas-Tooth, Sir Hugh
Steward, W. A. (Woolwich, W.)


Douglas-Hamilton, Lord Malcolm
Lyttelton, Rt. Hon. O.
Stewart, Henderson (Fife, E.)


Drayson, G. B.
McCorquodale, Rt. Hon. M. S.
Storey, S.


Dugdale, Maj. Rt. Hn. Sir T. (Richmond)
Macdonald, Sir Peter (I. of Wight)
Strauss, Henry (Norwich, S.)


Duncan, Capt. J. A. L
Mackeson, Brig. H. R.
Stuart, Rt. Hon. James (Moray)


Duthie, W. S.
McKibbin, A. J.
Studholme, H. G.


Eccles, Rt. Hon. D. M.
McKie, J. H. (Galloway)
Summers, G. S.


Elliot, Rt. Hon. W. E.
MacLeod, Rt. Hon. lain (Enfield, W.)
Sutcliffe, H.


Erroll, F. J.
MacLeod, John (Ross and Cromarty)
Taylor, William (Bradford, N.)


Fell, A.
Macmillan, Rt. Hon. Harold (Bromley)
Thomas, Rt. Hon. J. P. L. (Hereford)


Finlay, Graeme
Macpherson, Maj. Niall (Dumfries)
Thompson, Lt.-Cdr. R. (Croydon, W.)


Fisher, Nigel
Maitland, Comdr J. F. W. (Horncastle)
Thorneycroft, R. Hn. Peter (Monmouth)


Fleetwood-Hesketh, R. F.
Maitland, Patrick (Lanark)
Thornton-Kemsley, Col C. N


Fletcher-Cooke, C.
Manningham-Buller, Sir R. E.
Turner, H. F. L.


Fort, R.
Marshall, Douglas (Bodmin)
Turton, R. H.


Foster, John
Maude, Angus
Vane, W. M. F.







Vaughan-Morgan, J. K.
Watkinson, H. A.
Wills, G.


Vosper, D. F.
Webbe, Sir H. (London amp; Westminster)
Wilson, Geoffrey (Truro)


Wakefield, Edward (Derbyshire, W.)
Wellwood, W.
Wood, Hon. R.


Wakefield, Sir Wavell (Marylebone)
While, Baker (Canterbury)
York, C


Walker-Smith, D. C
Williams, Rt. Hon. Charles (Torquay)



Ward, Hon. George (Worcester)
Williams, Gerald (Tonbridge)
TELLERS FOR THE NOES:


Ward, Miss I. (Tynemouth)
Williams, Sir Herbert (Croydon, E.)
Mr. Drewe and Mr. Heath.


Waterhouse, Capt. Rt Hon. C
Williams, R Dudley (Exeter)

7.0 p.m.

Mr. Victor Raikes: I beg to move, in page 14, line 16, at the end, to insert:
and in paragraph (b)of subsection (3) of section two hundred and twelve for the reference to thirteen pounds there shall be substituted a reference to seventy pounds.

The Chairman: The Amendment in the name of the hon. Member for Glasgow, Central (Mr. McInnes), in page 14, line 16, at the end, to insert:
(4) In paragraph (b) of subsection (3) of section two hundred and twelve of the said Act (which relates to relief in respect of children undergoing training for the reference to thirteen pounds there shall be substituted a reference to eighty-five pounds.
might be considered with this one, as both of them deal with the same point.

Mr. Raikes: I hope that on this occasion I may obtain a concession from the Government. I have not until now intervened on the Finance Bill, and I propose to intervene only for a very short time to try to clear up an anomaly which has existed for some time and has had attention drawn to it by Members on both sides of the Committee.
Under Section 212 of the Income Tax Act, parents are allowed tax relief on £70, a figure which is now being raised to £85, for every child over the age of 16 who is being fully educated, if that child has not an income on his own behalf of more than £70 per annum. On the other hand, in the case of a parent who has a child of over 16 years of age fully apprenticed under contract, the parent will only receive an allowance if the child's income is under £13. If it is more than that, the whole allowance of £70 is withheld.
I hold the view very strongly that there should be no differentiation between the tax deduction allowance in the case of the child over 16 at college and the child of the same age who is an apprentice. It is rather a disincentive to parents to maintain this anomaly. Parents who would otherwise be inclined to send their child as an apprentice might, because they do not get the allowance, be persuaded to send their child into a dead-

end occupation in which more money is paid.
That point was raised last year by my hon. Friend the Member for Scotstoun (Mr. J. R. H. Hutchison), who is now Under-Secretary of State for War, and was received with some favour by the Government of the day. The right hon. Member for Battersea, North (Mr. Jay) took the opportunity of saying that the point would not be overlooked. For various reasons it was overlooked. I hope that this evening we shall be able to get some assurance that it will be dealt with now.
This may seem to be a small point, but it is an important one to the type of parents whom we wish to encourage, who are prepared to make some sacrifice to give their child an opportunity to get a job which, in the long run, will be to his or her advantage—

Mr. Ede: And to the national advantage

Mr. Raikes: —and of course, as the right hon. Gentleman says, to the national advantage.
I have intervened briefly, and I have not intervened previously in the discussion of the Finance Bill, both of which points should be an encouragement to my right hon. Friend to regard my plea a little more tenderly than he might otherwise do. That is my hope. Whether or not he accepts the exact terms of the Amendment, I hope that he will look into this matter with the object of levelling out the position in the course of his Budget. It might be better, of course, if my right hon. Friend accepted the figure of £85 suggested in the Amendment of the hon. Member for Glasgow, Central (Mr. McInnes) rather than the £70 in this Amendment, which relates to the existing law in regard to other children over 16 who are being educated. But I think the time has come when this anomaly should be altered, and from a completely nonparty point of view I appeal to the Chancellor to consider favourably this Amendment.

Mr. James McInnes: I understand that we are taking this Amendment along with the Amendment in my name and that of my hon. Friend the Member for Hamilton (Mr. T. Fraser).
As the Committee will appreciate the Amendment is designed to bring young persons in training into the same scale of tax relief as is accorded to other young people mentioned in the Income Tax Act. Under that Act relief is allowed in respect of a young person under the age of 16, provided that young person is not in receipt of his own income in excess of £85 per annum.
Relief is allowed to a young person over 16 provided that young person is attending an educational establishment in pursuance of his education, and is not in possession of an income in excess of £85. A relief is also allowed to a young person over 16 who may have an unearned income not in excess of £85. But where a young person over 16 is undergoing training as an apprentice and earns more than £13 a year, the parents receive no Income Tax allowance.
If we take a case of a young person who remains at school in order to obtain the higher leaving certificate and then decides to enter either the law or accountancy, or any other of the professions, if he earns more than £13 a year —and we all recognise that the general scale of salary in these professions is in the region of £20 or £30 a year—the parent is faced with the problem of providing class fees, examination fees, travelling expenses, food and clothes and the rest. But because the young person earns more than £13, the parent loses the right to the Income Tax relief.
I think the Committee will agree that this is very discouraging to the young people and, as has been indicated, it tends to lead them into dead-end occupations. We ought not to discourage young people from becoming skilled in industry. It is these young people who will form the components of a successful commercial or industrial machine; and I hope that the Chancellor in his generosity will look favourably on the proposal that the scale of relief allowed to young persons in training should be the same as that allowed to the other categories which I have mentioned.

7.15 p.m.

Captain Duncan: I remember late one night last year sitting on the benches opposite listening to my hon. Friend the Member for Scotstoun (Mr. J. R. H. Hutchison), who is now the Under-Secretary of State for War, pleading this case. I am glad that my hon. Friend the Member for Garston (Mr. Raikes) has re-introduced it in this Finance Bill.
Just after I listened to my hon. Friend last year, I had a case in my own constituency of a man who had a son of 18 who was becoming an apprentice quantity surveyor. Because he was earning £36 a year gross, out of which there were deductions for insurance, travelling, meals and so on, his father received no Income Tax allowance at all. When I read about this case, and after correspondence with the Government out of which I got no change, I deterbined to add my name to this Amendment if it appeared on the Order Paper.
On general grounds, it seems to me there ought not to be any difference between the young man or woman who goes to college and the young person who goes for an apprenticeship. The object is the same. Looking to the future of our industries, what we shall want more than anything is more and more highly technically trained people. If we are to keep our position in the world—I tried to make this point on the last Amendment—we have to make industry efficient in every possible way and give it every chance to progress. If the lack of this facility prevents parents from apprenticing their children to a trade or profession in any way, it will not be to the national interest, and it is for those reasons that I support this Amendment.

Mr. Ede: I would appeal to the Chancellor to listen to what has been said about this Amendment. A good many years ago, when I was formerly in Opposition, I moved an Amendment which, as the result of consideration by the Treasury, secured the first allowance for apprentices.

Captain Duncan: I think it was Tinker who moved the Amendment.

Mr. Ede: My name was on Amendment, and whether I spoke first or second, I was associated with it. I hope that this reasonable extension, which is


really only the fulfilment of the idea behind the scheme, may now be considered.
What amazes most people who have to give attention to details of the earnings of juveniles is the very large amount that some can get immediately after they leave school in the most iniquitous of blind alley occupations. Curiously enough, I come across it as a defence for committing petty burglary; that they are so well off that they have to do something like that to get a little excitement in their spare time. I recollect a recent case at Surrey Quarter Sessions when eight youths, just beyond the school-leaving age, appeared before the court. All were earning sums of over £5 a week.
It must be a very great temptation to parents, just on the fringe of putting the permanent interests of their children over the immediate interests of the family, to say, "Why should I worry? The boy can earn £5 a week or more straight away, whereas if I apprentice him he will be bound for a substantial number of years. He will be an expense to me and I shall get no benefit from it."
In a former association the right hon. Gentleman and I were exceedingly anxious that we should give equal status to the lad whose abilities are practical and the lad whose abilities are academic. One of my hon. Friends mentioned the kind of lad who goes in for one of the learned professions by way of apprenticeship or articles. After all, there is not much difference between the lad who is articled and the lad who goes to university.
Let us consider the case of the aspiring solicitor. He goes to the university to get his LL.B., and his parents secure the advantage because he is in a place of higher education. But if he is articled to the local solicitor and is learning his profession in that way, his parents are unlikely to qualify for the Income Tax concession which is given to the parents of the lad who goes to university.
All of us desire that there should be no differentiation between lads of parts who are striving to qualify themselves to serve the country in a skilled occupation, whether it be a manual occupation or one of the learned professions. This differentiation is one of the remaining marks of social inferiority which some people think

exists between youths of either sex whose aptitudes are practical and those whose aptitudes are academic
I know that on the general principle the right hon. Gentleman would not for one moment dispute the line of argument which I have adopted. I urge that this is a concession which is well worth while, not merely in the interests of the parents concerned, but in the interests of the young people and of the nation. It is by recruiting the skill of our young craftsmen and increasing the number of men and women capable of creative designing that we shall be able to hold our position in the world of the future.
This concession is one of those which will not merely help the country but will make it apparent to the parents that we recognise the contribution that all children of parts can make towards national recovery and the maintenance of our national position. I sincerely hope that the right hon. Gentleman will find himself able to make a substantial concession to what, I am sure, is the general feeling of the Committee on this issue.

The Solicitor-General (Sir Reginald Manningham-Buller): I do not think that anyone has cause to complain about the manner in which the argument in favour of this Amendment has been put forward by my hon. Friends or by hon. and right hon. Gentlemen opposite. I should like to begin by reminding the Committee of the history of this matter. From 1920, when the child allowance was introduduced, there was no allowance until 1938 in respect of a child undergoing training for any trade, profession or vocation.
It was then introduced, and from that moment until now the distinction has always been maintained between the child undergoing whole-time education in an educational establishment and an unpaid apprentice—using that term in its widest sense—on the one hand, and the child who has started on his or her career and is earning a living. The intent of the original extension was to make it apply to what one might call the unpaid apprentice, and no more.
My hon. Friend the Member for Garston (Mr. Raikes) fell into one slight error—he was not alone in this—in suggesting that the receipt by the apprentice of £13 in one year would of itself disqualify the parents from obtaining the child allowance. That is not quite


accurate. In calculating the £13, one disregards entirely any sum that is paid in repayment of premium during the course of the year. In the case which the right hon. Gentleman the Member for South Shields (Mr. Ede) mentioned of the young gentleman articled to a firm of solicitors, and I think in many other cases, it is common to secure that during the period of the apprenticeship there should be a refund of at least part of the premium.

Mr. Alfred Robens: Surely that is a capital repayment.

The Solicitor-General: It is certainly a receipt by the individual.

Mr. Robens: The father of the child provides a premium. That is repaid while the child is earning some money. Surely it is not suggested that the amount of premium so returned is to be computed as the income of the child.

The Solicitor-General: What I was saying was that when one calculates the £13 one ought not to ignore the provision in the statute which says that, in taking into account the earnings of the child, one should disregard any refund of the premium to him. The right hon. Gentleman will find that there is express provision for that in Section 212.
That is the history of the matter so far. The important point is that ever since 1938—and, indeed, throughout the last six years—the distinction has been made between the position of what I might call the unpaid apprentice, and the child who has started his or her career. That distinction was maintained by the late Government. At present, as the Committee are aware, a Royal Commission is considering all these personal allowances. It would be much better to receive their Report on the changes which they may propose, not only to child allowances, and to consider that rather than to make some piecemeal changes, it may be of a somewhat radical character, while they are still sitting.
It has been well recognised that when matters have been referred to a Commission, as they were by the last Government, one ought to wait to see what the Commission report before making an important change in principle. But, so far as the allowance of £13 is concerned, it may well be that one can make some adjustment, without in any way materially

affecting the principle on which, so far, this allowance has been administered in respect of children undergoing full-time education and children who are also receiving training whole-time for not less than two years.
I am afraid that, in some respects, what I have just said does not entirely satisfy the arguments advanced, but I assure hon. and right hon. Gentlemen that we are not unsympathetic to the views they have put forward. We certainly will give consideration to whether this time we can raise the limit of £13 to a more—

Captain Duncan: In this Bill?

The Solicitor-General: In this Bill. We will consider the precise amount and the exact implications involved. It may be possible, and we hope that it will, to make some adjustment to that figure without departing from the principle which has been in existence since 1938. A departure from that principle must, we feel, await the Report of the Royal Commission.

Mr. Jay: Does the hon. and learned Gentleman undertake to give a definite reply by the Report stage of the Bill saying what the Government can do?

The Solicitor-General: I hope that we shall be in a position to put down an Amendment on the Report stage. In conclusion I should like to say that I intervened at this early stage in the hope that what I said might shorten the discussion. The argument in favour of the Amendment has been made from both sides of the Committee, and surely it will not gain force from repetition.

7.30 p.m.

Mr. Houghton: I think that the right hon. and learned Gentleman could have shortened the discussion had he given a more definite promise as to the Government's intentions towards this Amendment. Surely it must be apparent that this maximum amount of earnings for apprentices, of £13 a year which was fixed in 1938–39, should now be adjusted to current levels of money values. The child allowance was £60 a year when this figure of £13 was fixed as the maximum amount that an apprentice could earn to enable the parents still to qualify for the child allowance, so that, on simple arithmetical proportions, there is justification for raising the figure of £13.
There is another aspect of the matter, to which the right hon. and learned Gentleman referred, but which is not being pressed in the narrow terms of this Amendment, though it is referred to in a subsequent Amendment standing in the names of my right hon. Friend and myself which is not before the Committee and which may not be in order. That concerns the reckoning of the returned premiums to which the right hon. and learned Gentleman referred, and that might well be a matter which the Royal Commission should consider in relation to this type of allowance. On the maximum earnings of apprentices, surely the right hon. and learned Gentleman can say that the Government will put down a proposal before Report stage. It is nothing short of monstrous—

The Solicitor-General: I thought that I had made it quite clear that I certainly hope to be in a position to put down an Amendment before the Report stage. I hope it will be possible, and I think it will. If it is not, we shall, presumably, be open to violent attack by the Opposition.

Mr. Houghton: I wish Ministers would say what they mean. They are worse than civil servants, and are bad enough, in all conscience. A few moments ago he told us that he would certainly consider whether the Government could put down a further proposal. Now he carries the matter a stage further and says that he certainly intended to convey the hope that the Government intend to do something about it. Why does he not get up and say, "We will do something about it," in which case the Committee could be reassured, we could shut up and get on with something else?
When he is so cagey and unforthcoming, I am bound to say that it is nothing short of monstrous that the parents of a boy who is learning a trade and who may be getting 15s. or even 25s. a week, and who have to maintain, clothe and feed him, should be denied the child allowance. while another boy who is receiving £80 from a settlement by his grandfather, can qualify for that child's allowance in full.
This is class distinction. I do not know why so many years have had to pass before the apprentice was placed on the slightest footing of comparison with the

child having an extended whole-time education. Certainly, this is a case in which the right hon. and learned Gentleman should give the Committee an assurance, upon which we could be satisfied that the Government intend to do something about it.

Mr. Raikes: In view of the Minister's assurance that he intends—

Mr. Thomas Fraser: On a point of order. If the hon. Gentleman is seeking to withdraw the Amendment, as, I have my name to another Amendment in the name of my hon. Friend the Member for Glasgow, Central (Mr. McInnes), which has been referred to in this discussion, may I inquire whether, if the hon. Gentleman withdraws his Amendment, I should be in order in moving that Amendment?

The Temporary Chairman (Colonel Sir Leonard Ropner): No. That Amendment has not been selected by the Chair, but in the circumstances, if the hon. Member for Garston (Mr. Raikes) will give way, I will call the hon. Member for Hamilton (Mr. Fraser).

Mr. Fraser: I shall not detain the Committee for long. I was a little disappointed in the reply given by the Solicitor-General, who gave the impression that nothing could be done because a Royal Commission was sitting, and then went on to say that he hoped that this matter would be further considered and that the Government would be able to bring forward another Amendment. I sincerely hope that the Government will be able to bring forward such an Amendment, and that it will have the effect of carrying out the purpose of the Amendment on the Order Paper in the name of the hon. Member for Glasgow, Central, and myself.
My reason for expressing that hope is that it seems to me that justice can only be done by accepting that Amendment. After all, the parents of a child who goes to college or university receive the child allowance if that child earns less than £85 a year, and many of them, in fact, come very near to that. It seems to me to be monstrous that the parents of a young person who is articled to a profession or who, after going to technical college, goes into the office of a surveyor or architect, receives training there and receives £20 or £30 a year, should receive no child's allowance.
The only way of giving justice to the parents of a child who is not actually at school but has gone into full-time training and is earning very little, is to give them the same treatment as would be given if the child was at a school or educational establishment and receiving full-time training there. That would mean, of course, that this figure of £13 must be altered to £85 per year, and I do not think that any hon. Member of the Committee will argue that there is any reason for a differentiation between the one and the other.
The right hon. and learned Gentleman made reference to the repayment of premiums. I have made inquiries in Scotland, and I am assured that this is not the case in Scotland. I was told that the reason why little attention was paid to that provision in the 1952 Act was because this system of repayment of premiums did not obtain in Scotland, and there was no possible illusion about income from the repayment of premiums.
However, the main point is that the young person who is at school can earn £85 a year, but the young person in training can have an unearned income of £85 a year and the parents will still get this relief, so that the young person with an unearned income of £85 a year still attaches to his parents this relief provision, and it seems to me to be monstrous that unearned income should be treated more generously than earned income.
I hope that an Amendment will appear on the Order Paper in the name of the Chancellor, and that it will provide for an increase in the sum of £13.

Mr. Raikes: In view of the statement of my right hon. and learned Friend, I beg to ask leave to withdraw the Amendment.
Amendment, by leave, withdrawn.

Sir Frank Soskice: I beg to move, in page 14, line 16, at the end, to insert:
(4) In subsection (1) of section two hundred and twelve of the Income Tax Act, 1952, insert after the words: "In this provision 'child' includes a step-child" the following words— "(including a child of a former marriage both of whose parents are still living).
This Amendment deals with a small, but not altogether unimportant point, and I hope that the Solicitor-General, if he is going to reply, will tell us that he is

prepared to give it very careful thought. It arises in this way. The child allowance is granted under Section 212 (1) of the Income Tax Act, 1952, if the claimant proves inter alia that he has living at any time any child, and then certain other requirements are specified in the subsection. The word "child" is then defined in the subsection as including a step-child, and the question which arises is what the term "step-child" means in that connection.
I suppose that if a man marries a widow who has a child, anybody would say without much hesitation that the child of the widow is his step-child; but I am informed that in the Departments which have to administer this branch of the law, there is some doubt whether that expression would include the case of a man who marries a woman who has divorced a previous husband and who has a child by that previous husband, the question being whether that child is the step-child of the second husband.
I am told, whether rightly or wrongly, that as a matter of practice an allowance is given under Section 212 (1) in a case of that sort where the wife has the custody of the child of her former marriage, but that the allowance is not given in a case where the wife has not had the custody of the child awarded to her. I can quite see that that is a commonsense position. But supposing that the expression "step-child" in the definition of Section 212 (1) does include the child of a woman who has previously divorced her husband, then clearly Section 212 (1) should require that the second husband should have the allowance in both cases, so that either the definition does include such a child or it does not.
I think everybody will agree that it is in the public interest that whatever the law is, it should, so far as possible—and I know there are limits to that possibilty—be made plain. We and the Inland Revenue authorities should know whether a step-child in that sense includes a child of a woman who has previously divorced her husband, and I am simply asking by this Amendment that some steps should be taken to make it perfectly plain whether it does or does not.
This actual Amendment contains certain imperfections. If it is common sense that the second husband should get the allowance when his wife has been given


the custody of the child, but not otherwise, then the Amendment should be so drafted, but in its present form it does not draw a distinction between the two cases. The reason I commend the Amendment to the Solicitor-General is that there is some obscurity at the moment. If the term "step-child" does include such a child, then the requirement of Section 212 (1) is that in any case the second husband should get the allowance. If it does not, then in neither case does he get the allowance.
7.45 p.m.
We should know whether such a child comes within the Section or not. I ask the Solicitor-General to recognise that there is a problem here and to tell the Committee that between now and the Report stage he will give the matter very earnest thought, and that if he really thinks there is a problem here he will on the Report stage introduce an Amendment putting the matter beyond all doubt in regard to the two situations I have described.

The Solicitor-General: I think the Committee will agree that the point made by the right hon. and learned Member for Neepsend (Sir F. Soskice) would not be immediately apparent from reading the Amendment on the Order Paper, and I think we can all agree that in its present form the Amendment will not do. The right hon. and learned Gentleman has asked two specific questions to which I will endeavour to give him answers.
He asked, first, whether the definition of "step-child" in Section 212 would cover the child of a former marriage both of whose parents were still living, and whether where, for instance, the wife had married again, that child would be the step-child of the second husband. As I understand the position in law, that is quite clearly covered by the terms of this Section. A step-child does not, in fact, cease to be a step-child because both its parents are living.

Sir F. Soskice: Can the hon. and learned Gentleman refer me to any definition contained in the statute or to any reported case so decided?

The Solicitor-General: I have looked at one or two cases, and there is a very old one in line with that view I have put

forward to which I can draw the right hon. and learned Gentleman's attention, though I have not the reference with me now. I personally can see no grounds whatever for forming the view that a step-child ceases to be a step-child if it happens that both its parents are living. I do not think we need argue about that part of it, however, because that was not the real point behind the Amendment.
The right hon. and learned Gentleman asked what was the position where the first husband had the custody of the child. That is a point of considerable substance, and I can give him the assurance that between now and the Report stage we will give careful consideration to that point. I am not in a position at the moment to give him an answer to the question he has asked with regard to that. I think he will understand the reason why; it is because it does not immediately appear from reading the Amendment.
As regards the practice which he says has grown up in the Inland Revenue Department, I have made very recent inquiry and I can assure him that I am informed that there is no general practice of treating a child of a former marriage as not being a step-child. It may be that in some instances that child has not been treated as a step-child where the custody has rested in the other parent, but where the wife has the custody and she has married again, I am advised that the general rule is that that child is treated as a step-child. If the right hon. and learned Gentleman knows of any case where that has not happened, I shall be indeed grateful if he will bring it to our attention and we will seek to put it right.
If there has been a divorce, express provision is made, very often by agreement between the parties, as to which of them shall be entitled to the child allowance, and I think the Inland Revenue has sometimes regard to that arrangement. In any case, we will look at the point between now and the Report stage and will endeavour to give the right hon. and learned Gentleman an answer either then or before then.

Sir F. Soskice: I thank the hon. and learned Gentleman for what he has said and, in view of what he has said, I beg to ask leave to withdraw the Amendment.
Amendment, by leave, withdrawn.

Mr. G. R. Mitchison: I beg to move, in page 14, line 16, at the end, to insert:
(4) After subsection (4) of section two hundred and twelve of the said Act (which relates to relief in respect of children) there shall be inserted the following subsection: —
(4A) Notwithstanding subsection (4) of this section relief shall be allowed under this section in respect of any child who is entitled in his own right to an income of between eighty-five pounds and one hundred and seventy pounds a year if no more than eighty-five pounds of his income is unearned:
Provided that the amount of such relief under the preceding provisions of this section shall be diminished by the amount of tax at the standard rate on the excess of the income over eighty-five pounds.
These are provisions with regard to children's relief. The short point is that at present there is an entitlement to children's relief provided that the child's income will not exceed the statutory amount, which is at present £85. What frequently happens is that in the case of a child who is growing up and is, let us say, in the last year to qualify for children's allowance, the child goes out to work and the result of that work is to bring it in an income which exceeds, perhaps by a small amount, the present limit of £85.
What happens then is that the child, by doing perhaps a comparatively small amount of work, has deprived the family of quite a considerable relief. It is true, of course, that in general one has to draw a line somewhere in these cases, but it has been common practice in Income Tax matters, for instance, when one fixes a rate of Surtax, if I may give an example at the other extreme, and in a number of other cases, to provide for marginal relief where the effect of the taxation provisions is that someone receiving a slightly larger gross income becomes, by reason of taxes, entitled to a net income which is actually smaller than he would have received if his gross income had been beneath the limit. That, I apprehend, is the general nature of marginal relief.
That has not yet been done in the case of children's allowances, and the result is —without for the moment making any distinction between earned and unearned income—that where the total income amounts to say £84, then that £84 gross becomes £84 net, whereas if the gross income is £100 then, after the deduction of tax at the present rate, the total net receipt is only £52 10s. I do not want to

go back to Purchase Tax, but one has a curious kind of blind spot above the limit where, because there has been some additional income—in the particular case I have in mind from additional earnings —the net amount the person receives is less than it would have been but for those additional earnings or additional income.
I was very much impressed the other day by hearing the Chancellor complain that he had many burdens on his shoulders at present. We appreciate that. We do not want to add many more, but this seems a case where, at any rate, we might make a beginning with removing this anomaly. It is particularly appropriate that we should seek to remove it in the first instance with regard to earnings which bring the child's income just above the limit.
After all, what is the effect of leaving things as they are? So far as the tax position goes, it is to discourage young persons from going into industry or into some small business, or whatever it might be, and earning money as soon as they could earn it. And if the present Budget is, and so far as it is, a Budget which promises incentives, here is an opportunity for the Chancellor to give effect to that intention, to give effect to it in a not very large way so as to get rid of what is at present a real unfairness.
It is not right, and it cannot commend itself to the Committee as right, that someone or other—a young man or woman in this instance—by earning a little money at the end of his or her period of school and training, should thereby lose instead of gaining. That is the result of the present system. Perhaps it has not been so important in the past —the rather distant past now—when children's allowance was quite small, but the children's allowance is a substantial matter now. It has become more substantial because the expense of keeping children has risen. That has been recognised by successive increases in the children's allowance.
Surely this Amendment must commend itself particularly to the Committee. It has the advantage that it allows an appropriate reward to those who start their enterprise, be it public, or be it private, at a reasonably early age. I suggest it ought to be in line with the views of both sides of the Committee. It ought


to commend itself on grounds of justice and as a first step towards removing a real hardship.
I need not go into detail on the effect of the Amendment. I submit it is perfectly clear. The effect is that when earned income brings the child's income over the statutory limit of £85, there should be what I might call a tapering relief that will gradually decrease from £85 up to £170. It need not, of course, be tied to every penny of those particular figures, though I think they are obviously the most reasonable ones. The form of the Amendment is perfectly simple, and it should involve no administrative difficulty whatever.

8.0 p.m.

The Solicitor-General: The hon. and learned Member for Kettering (Mr. Mitchison) has put the case for the Amendment with his usual clarity, although I must say that I am a little surprised to find him advancing it bearing in mind the attack which has been made on my right hon. Friend's Budget. I think the right hon. Member for Leeds, South (Mr. Gaitskell) referred to the Budget as a shabby device for taking money away from the poorer wage earners and handing it over to the better off taxpayers.
After that unwarranted attack, it is a little odd to find the hon. and learned Gentleman suggesting that children's allowances should still be paid to parents of children who are enjoying an income of up to £170 a year. I do not believe there are so very many children who have that income of their own in their own right every year—

Mr. Mitchison: I am sure the hon. and learned Gentleman has read the Amendment and recognises that it applies only to the excess over £85 in so far as that excess is earned. It is not the youthful capitalist I have in mind; it is the young man who, having already a little income, goes to work and supplements it.

The Solicitor-General: I did read, and I think understand, the hon. and learned Gentleman's Amendment. I do not think I need vary anything that I have said. The object of the Amendment is to enable the parent to draw a children's allowance if his son is earning or is in receipt of income up to £170 a year. It

is true that the hon. and learned Gentleman says that the second half of the income must be earned and the first part unearned, but the point of the Amendment is to extend the right to child allowance to cover cases where children are in receipt of an income of £170. To find him putting that forward at this time is to me somewhat surprising.
The hon. and learned Gentleman put forward the arguments in support of his proposal with his usual clarity, and I am afraid I must repeat to him the argument that I advanced at this Box a little earlier today in relation to the children's allowances. I said then that there is, as the hon. and learned Gentleman knows, a Royal Commission sitting, appointed by the late Government, going into many matters relating to tax laws and having under review the whole question of children's allowances. As I said earlier this evening, pending the results of their deliberations, Her Majesty's Government are not prepared to make any radical alterations in the present structure of the Income Tax law with regard to child allowances.
I gave notice in an earlier discussion of an alteration which I hoped to make, but I am afraid that this is a radical Amendment, and I cannot hold out any hope of any concession pending the report of the Royal Commission. But so far as the principle of the matter is concerned, I can assure the hon. and learned Gentleman that it will have our sympathetic consideration. I would, however, point out that there are certain difficulties in tying in his proposals with other parts of the Income Tax law.
To give him an example, the upper limit of income that he proposes now for the child allowance of £170 is somewhat out of relation to the upper limit for the dependant's allowance. Those factors will have to be taken into account. Rather than make any further alteration at the present time, I suggest to the hon. and learned Gentleman that it would be wise to await the Report of the Royal Commission, and I hope that will not be long forthcoming.

Mr. Chapman: The Solicitor-General's reply is disappointing. This is not, as he claimed, a radical alteration in the structure of Income Tax law. Before I come to the extent of the alteration, let me give an example which came to my


knowledge two months ago. This does not apply only to a child who is earning during the latter part of his education or some such case.
Let me give the case of a child whose parents are receiving an allowance, and who is ending his university or training college education in the month of July, and then perhaps is going to start teaching in September. This is a case which affects many people year after year. The child in that Income Tax year is dependent on his parents in the months of April, May, June, July, August and, perhaps, even part of September. For five-twelfths of the year his parents are going to keep and clothe him.
In September the child perhaps starts a job at the conclusion of his university education; certainly in the case of the teaching profession he would start in September. Between September and April the child receives seven months' earnings. In the case of a school teacher that would he quite substantial, and as I read the Act, because of those earnings, the parents will be unable to claim any allowance for the earlier five months when the child has been completely dependent on his parents.
I should have thought that this was no radical alteration. In fact, I support this Amendment on the grounds that half a loaf is better than no bread. It would only mean that a child who, in those first seven months of teaching, earned more than £170 a year would be outside this provision and the parent would still get no relief for the five-twelfths of the Income Tax year when he had been supporting that child. So this is indeed only half a loaf.
I am rather shocked that the Solicitor-General thinks that this is a radical alteration which is going to make all the difference to Income Tax law. If I had had an opportunity, I would have tabled an Amendment by which a parent could have an even better chance of claiming up to one-third of the amount of children's allowance if, in terms of months of the Income Tax year, the child was dependent on the parent for that period of the Income Tax year. That would have been much more just than this Amendment, but at least this is some step along the road.
A child can be dependent on his parents, at the present rate of earnings, for a long as six months of the financial year, and the parents can get no allowance for the child if, in the second half of the year, having finished his education, the child earns more than £85 a year. It is monstrous that the Solicitor-General should say that in that case, where there is real disability and hardship, he can make no allowance.
An even more difficult case came to my knowledge in which the parent was a widow who existed entirely on unearned income of a very small amount. She had made sacrifices so that the child could complete his training college education, only to find in the last year, and perhaps the most expensive year, that she would have to keep the child for a further five months and then be denied even a proportion of the child allowance for that period.
I hope it is not too late to press the Solicitor-General to have another look at this matter and see whether he can meet us in some way—perhaps not going so far as the Royal Commission may recommend, but providing some interim measure in the meantime until we can get the law thoroughly examined. Some such measure would, at least, mitigate the hardships which I have described.

Mr. Houghton: When I saw the Parliamentary Secretary to the Ministry of Civil Aviation back in his place, I thought to myself, "My unlucky star has risen again." I see that more than half the Liberal Party is in its place, and I feel reassured. I think they can lend support to the plea we make to the right hon. and learned Gentleman to promise some concession in regard to this Amendment.
The right hon. and learned Gentleman has reminded us yet again that there is a Royal Commission sitting on the taxation of profits and incomes. He is asking us to await their report before pressing him in relation to certain reforms which we think ought to be made; but his right hon. Friend the Chancellor of the Exchequer did not await the report of the Royal Commission before he introduced, in his Budget statement, some significant changes in the wide field of taxation that are now incorporated in this Bill. He has not awaited the report of the Commission before plunging into a reckless fulfilment of a still more reckless promise that an


Excess Profits Tax would be introduced if the Conservative Party were returned to office.
Now he has to deal with the consequences of that Bill. He has made changes in the personal allowances of single and married persons. He has made changes in the allowances for children. He has done all this without awaiting the report of the Royal Commission. It is a well-known principle of our system of graduated taxation to have an escalator Clause—or what the tax experts call marginal relief—in relation to allowances having a limit of income and where, without marginal relief, income which is in excess of the limit would bear a heavy penalty as compared with the relief given in the case of an income which is just under the limit.
For instance, under the proposals of this Bill, a child with an income of £86 a year will not be eligible for any child allowance whatever, but a child with an income of £84 a year will bring the full child allowance to its parents. In terms of tax that may mean anything between £12 15s., at the 3s. rate, and £40 a year where the parent is paying Income Tax at the standard rate. In connection with the age allowance which is already in operation there is an escalator Clause. In connection with the proposed relief to small incomes, which is contained in this Bill, the Chancellor of the Exchequer provides for marginal relief. An Amendment has been put down by the Chancellor in regard to dependent relatives which will extend the marginal relief given in the case of the allowance to a dependent relative based on the income of the dependent relative.
In other ranges, too, escalator Clauses operate to ensure that a person whose income is just above the limit does not pay more in tax than if his income was just within the limit. Here we have a clear case for marginal relief. My hon. and learned Friend the Member for Kettering (Mr. Mitchison) pointed out that we wished to restrict the marginal relief to the excess over the present limit of £85 a year of earned income. We felt in some difficulty in trying to meet the case which the right hon. and learned Gentleman mentioned as an illustration of what we were trying to do.
This is not an Amendment designed to assist the parents of children who have a settled unearned income over the maximum of £85 a year, though I think that, in justice, by reference to the principles to which I have referred, the marginal relief Clause should, in some measure, apply to them. But we have restricted this to the excess over the limit of £85 a year where that excess is earned income.
I have in my hand a letter from a woman who lives in my constituency drawing attention to the harsh operation of the present child allowance rule in the case of her daughter who has started work. I visited this woman. She lives in a modest worker's home in Todmorden. She says:
I have a daughter, aged 15 last 18th May,"—
this was last year—
who started work on July 23rd learning to weave at £2 10s. per week. She had her first wage on August 2nd. I wrote to Halifax"—
to the income Tax officials. She was an honest woman; lots of people do not write to Halifax to tell the Income Tax people when their child has started work —where there may be a continuance of the child allowance—and when parents do not write there are 99 chances out of a 100 that they will get away with the child allowance for the remainder of the year, for the simple reason that there is no administrative means of checking up on the child allowance in respect of parents who have claimed an allowance in the proper way earlier in the year and are getting allowance under P.A.Y.E. But in this case this honest woman wrote to Halifax.
8.15 p.m.
She received in reply a letter saying that she owed the Inland Revenue £7 10s. because they were withdrawing her child allowance from the beginning of the financial year. The child had not actually earned the £70 which, last year, would have been the limit of earnings for the purpose of the child allowance. They did not wait for the child to earn the £70. They reckoned out that at £2 10s. a week this child would have exhausted the qualification for child allowance before the end of the financial year, so they withdrew it there and then.
Our Amendment seeks to mitigate the harsh operation of the present rule in regard to child allowance. In such a case as the one I have quoted, if the child's


earnings in the financial year exceeded £85 then, by as much as they exceeded £85, the child allowance would be correpondingly reduced, which is strictly in accordance with all the escalator Clauses operating in relation to other allowances under the Income Tax code. I hope that the hon. and learned Gentleman, on reflection, will feel able to promise some reconsideration of this matter without waiting for the report of the Royal Commission.
When does the hon. and learned Gentleman expect to get the report of the Royal Commission? It is only in the last week or two that a new chairman has been appointed, after a period of many months during which the Commission has been without the services of a chairman. It is true that under the stimulus of great urgency the Royal Commission of 1919 reported within a year, but I doubt whether any hon. or right hon. Member of this Committee is expecting to get within a year the report of the Royal Commission which is now sitting. Taxation is much more complex now, and a wide variety of matters has to be considered.

I would, therefore, impress upon the hon. and learned Gentleman the need for meeting the case of the Amendment, for tapering off the allowance when earned income exceeds the £85 limit. I trust that he is not going to leave the parents of children in the invidious circumstances of the woman whose case I have just mentioned, of two parents, both weavers, both working in the textile industry—though not both working today—both helping to maintain output for export, whose joint earnings rendered them liable to Income Tax and who, just at the moment when they were buying their daughter a new frock, new clothes, overalls for the mill, a bicycle to go to work and other things which were needed for the girl starting off at the age of 15 in her first job, received a claim for arrears of tax amounting to £7 10s. That is not right, and I feel that the hon. and learned Gentleman ought to see that it is put right.

Question put, "That those words be there inserted."

The Committee divided: Ayes, 204; Noes, 219.

Division No. 137.]
AYES
[8.20 p.m.


Acland, Sir Richard
Dalton, Rt. Hon. H.
Harrison, J. (Nottingham, E.)


Adams, Richard
Darling, George (Hillsborough)
Hastings, S.


Albu, A. H.
Davies, A. Edward (Stoke, N.)
Hayman, F. H.


Anderson, Alexander (Motherwell)
Davies, Rt. Hn. Clement (Montgomery)
Henderson, Rt. Hon A. (Rowley Regis)


Anderson, Frank (Whitehaven)
Davies, Ernest (Enfield, E.)
Herbison, Miss M.


Attlee, Rt. Hon. C. R.
Davies, Stephen (Merthyr)
Holman, P.


Awbery, S. S.
de Freitas, Geoffrey
Holmes, Horace (Hemsworth)


Ayles, W. H
Deer, G.
Holt, A. F.


Balfour, A
Delargy, H. J.
Houghton, Douglas


Barnes, Rt. Hon. A J
Dodds, N. N.
Hoy, J. H.


Bartley, P.
Donnelly, D. L.
Hubbard, T. F.


Bence, C. R.
Driberg, T. E. N.
Hudson, James (Ealing, N.)


Benn, Wedgwood
Ede, Rt. Hon. J. C.
Hughes, Cledwyn (Anglesey)


Benson, G.
Edwards, Rt. Hon. Ness (Caerphilly)
Hughes, Hector (Aberdeen, N.)


Bing, G. H. C.
Edwards, W. J. (Stepney)
Hynd, J. B. (Attercliffe)


Blackburn. F.
Evans, Edward (Lowestoft)
Irvine, A. J. (Edge Hill)


Blenkinsop, A.
Ewart, R.
Irving, W. J. (Wood Green)


Blyton, W. R.
Fernyhough, E
Isaacs, Rt. Hon. G. A


Boardman, H.
Field, W. J.
Janner, B.


Bottomley, Rt. Hon. A. G.
Finch, H. J.
Jay, Rt. Hon. D. P. T.


Bowden, H. W.
Fletcher, Eric (Islington, E.)
Jeger, Dr. Santo (St. Pancras, S.)


Braddook, Mrs. Elizabeth
Follick, M.
Jenkins, R. H. (Stechford)


Brockway, A. F.
Forman, J. C.
Johnson, James (Rugby)


Brook, Dryden (Halifax)
Fraser, Thomas (Hamilton)
Johnston, Douglas (Paisley)


Brown, Rt. Hon. George (Belper)
Freeman, John (Watford)
Jones, David (Hartlepool)


Brown, Thomas (Ince)
Gibson, C. W.
Jones, Jack (Rotherham)


Burke, W. A.
Glanville, James
Jones, T. W. (Merioneth)


Burton, Miss F. E.
Gooch, E. G.
Keenan, W.


Butler, Herbert (Hackney, S.)
Gordon Walker, Rt. Hon. P. C
Kinley, J.


Carmichael, J.
Grenfell, Rt. Hon. D. R.
Lee, Frederick (Newton)


Castle, Mrs. B. A.
Grey, C. F.
Lever, Leslie (Ardwich)


Champion, A. J.
Griffiths, David (Rother Valley)
Lindgren, G. S.


Chapman, W. D
Griffiths, Rt. Hon. James (Llanelly)
Logan, D. G.


Chetwynd, G. R
Grimond, J.
MacColl, J. E.


Clunie, J.
Hale, Leslie (Oldham, W.)
McGhee, H. G.


Coldrick, W.
Hall, Rt. Hon. Glenvil (Colne Valley)
McInnes, J.


Collick, P. H.
Hall, John (Gateshead, W.)
McKay, John (Wallsend)


Corbet, Mrs. Freda
Hamilton, W. W.
McLeavy, F.


Craddock, George (Bradford, S.)
Hardy, E. A.
MacMillan, M. K. (Western Isles)


Crosland, C. A. R.
Hargeaves, A
Mallalieu, J. P. W. (Huddersfield, E.)




Manuel, A. C.
Pursey, Cmdr. H.
Thomas, Ivor Owen (Wrekin)


Marquand, Rt. Hon H. A.
Reeves, J.
Thorneycroft, Harry (Clayton)


Mellish, R. J.
Reid, Thomas (Swindon)
Thurtle, Ernest


Messer, F.
Richards, R.
Turner-Samuels, M.


Mitchison, G. R.
Robens, Rt. Hon. A.
Ungoed-Thomas, Sir Lynn


Moody, A. S.
Roberts, Albert (Normanton)
Viant, S. P.


Morgan, Dr. H. B. W
Robinson, Kenneth (St. Pancras, N.)
Wade, D. W.


Morris, Percy (Swansea, W.)
Rogers, George (Kensington, N.)
Watkins, T. E.


Morrison, Rt. Hon. H. (Lewisham, S.)
Ross, William
Webb, Rt. Hon. M. (Bradford, C.)


Mort, D. L.
Royle, C.
Weitzman, D.


Moyle, A.
Schofield, S. (Barnsley)
Wells, Percy (Faversham)


Mulley, F. W.
Shackleton, E. A. A.
West, D. G.


Neal, Harold (Bolsover)
Shawcross, Rt. Hon. Sir Hartley
Wheatley, Rt. Hon. John


O'Brien, T.
Silverman, Julius (Erdington)
White, Henry (Darbyshira, N. E.)


Oldfield, W. H.
Simmons, C. J. (Brierley Hill)
Whiteley, Rt. Hon. W.


Oliver, G. H.
Slater, J.
Wigg, George


Oswald, T.
Smith, Ellis (Stoke, S.)
Wilkins, W. A.


Padley, W. E.
Smith, Norman (Nottingham, S.)
Willey, Frederick (Sunderland, N.)


Paget, R. T.
Sorensen, R. W.
Williams, Rev. Llywelyn (Aberilliery)


Paling, Rt. Hon. W. (Dearne Valley)
Soskice, Rt. Hon. Sir. Frank
Williams, Ronald (Wigan)


Paling, Will T. (Dewsbury)
Sparks, J. A.
Williams, Rt. Hon. Thomas (Don V'll'y)


Pargiter, G. A.
Steele, T.
Williams, W. R. (Droylsden)


Parker, J
Stewart, Michael (Fulham, E.)
Wilson, Rt. Hon. Harold (Huyton)


Paton, J.
Strachey, Rt. Hon. J. 
Winterbottom, Richard (Brightside)


Pearson, A.
Sylvester, G. O.
Woodburn, Rt. Hon. A.


Pearl, T. F.
Taylor, Bernard (Mansfield)
Yates, V. F.


Poole. C. C.
Taylor, John (West Lothian)



Prica, Joseph T. (Westhoughton)
Taylor, Rt. Hon. Robert (Morpeth)
TELLERS FOR THE NOES:


Proctor, W. T
Thomas,Iorwerth (Rhondda W.)
Mr. Arthur Allen and Mr. Hannan.




NOES


Aitken, W. T.
Drewe, C
Johnson, Howard (Kemptown)


Alport, C. J. M.
Dugdale, Maj. Rt. Hon. Sir T. (Richmond)
Jones, A. (Hall Green)


Amery, Julian (Preston, N.)
Duncan, Capt. J. A. L.
Keeling, Sir Edward


Amory, Heathcoat (Tiverton)
Duthie, W. S.
Kerr, H. W. (Cambridge)


Anstruther-Gray, Major W. J.
Eccles, Rt. Hon. D. M.
Lambert, Hon. G.


Arbuthnot, John
Elliot, Rt. Hon. W. E.
Lambton, Viscount


Ashton, H. (Chelmsford)
Erroll, F. J.
Lancaster, Col. C. G


Assheton, Rt. Hon. R. (Blackburn, W.)
Fell, A.
Langford-Holt, J. A.


Astor, Hon. J. J. (Plymouth, Sutton)
Finlay, Graeme
Law, Rt. Hon. R. K.


Astor, Hon. W. W. (Bucks, Wycombe)
Fisher, Nigel
Leather, E. H. C.


Baker, P. A. D
Fleetwood-Hesketh, R. F.
Legh, P. R. (Petersfield)


Baldock, Lt.-Cmdr. J. M.
Fletcher-Cooke, C.
Linstead, H. N.


Baldwin, A. E.
Foster, John
Lockwood, Lt.-Col. J. C.


Barber, A. P. L.
Fraser, Hon. Hugh (Stone)
Low, A. R. W.


Baxter, A B.
Gage, C. H.
Lucas, P. B. (Brentford)


Beach, Maj. Hicks
Galbraith, Cmdr. T. D. (Pollok)
Lucas-Tooth, Sir Hugh


Bell, Ronald (Bucks, S.)
Galbraith, T. G. D. (Hillhead)
Lyttelton, Rt. Hon. O.


Bennett, F. M. (Reading, N.)
Garner-Evans, E. H.
Macdonald, Sir Peter (I. of Wight)


Bevins, J R. (Toxteth)
George, Rt. Hon. Maj. G. Lloyd
Mackeson, Brig. H. R.


Birch, Nigel
Godber, J. B.
McKibbin, A. J.


Bishop, F. P.
Gomme-Duncan, Col. A.
McKie, J. H. (Galloway)


Black, C. W.
Gough, C. F. H.
MacLeod, Rt. Hon. Iain (Enfield, W.)


Bossom, A. C.
Gower, H. R.
MacLeod, John (Ross and Cromarty)


Bowen, E. R.
Graham, Sir Fergus
Macmillan, Rt. Hon. Harold (Bromley)


Boyd-Carpenter, J. A.
Gridley, Sir Arnold
Maitland, Comdr. J. F. W. (Horncastle)


Boyle, Sir Edward
Grimston, Sir Robert (Westbury)
Maitland, Patrick (Lanark)


Braine, B. R.
Harris, Frederic (Croydon, N.)
Manningham-Buller, Sir R. E


Braithwaite, Sir Albert (Harrow, W.)
Harris, Reader (Heston)
Marshall, Douglas (Bodmin)


Brooke, Henry (Hampstead)
Harrison, Col. J. H. (Eye)
Maude, Angus


Buchan-Hepburn, Rt. Hon. P. G. T.
Harvie-Watt, Sir George
Maudling, R.


Bullard, D. G.
Heald, Sir Lionel
Maydon, Lt.-Comdr. S L. C


Bullus, Wing Commander E. E.
Heath, Edward
Medlicott, Brig. F.


Burden, F. F. A.
Higgs, J. M. C.
Mellor, Sir John


Butler, Rt. Hon. R. A. (Saffron Walden)
Hill, Dr. Charles (Luton)
Molson, A. H. E.


Carr, Robert (Mitcham)
Hill, Mrs. E. (Wythenshawe)
Moore, Lt.-Col. Sir Thomas


Channon, H.
Hirst, Geoffrey
Mott-Radclyffe, C. E.


Clarke, Col. Ralph (East Grinstead)
Holland-Martin, C. J.
Nabarro, G. D. N.


Cole, Norman
Hollis, M. C.
Nicholson, Godfrey (Farnham)


Colegate, W. A.
Holmes, Sir Stanley (Harwich)
Nicolson, Nigel (Bournemouth, E.)


Conant, Maj. R. J. E.
Hope, Lord John
Nield, Basil (Chester)


Craddock, Beresford (Spelthorne)
Hornsby-Smith, Miss M. P.
Noble, Comdr. A. H. P.


Crookshank, Capt. Rt. Hon. H. F. C.
Horobin, I. M.
Nugent, G. R. H


Crosthwaite-Eyre, Col. O. E.
Horsbrugh, Rt. Hon. Florence
Nutting, Anthony


Crouch, R. F.
Howard, Gerald (Cambridgeshire)
Oakshott, H. D.


Darling, Sir William (Edinburgh, S.)
Hudson, Sir Austin (Lewisham, N.)
Ormsby-Gore, Hon. W. D.


Deedes, W. F.
Hurd, A. R.
Orr, Capt. L. P. S.


Digby, S. Wingfield
Hutchison, Lt.-Corn. Clark (E'b'rgh W.)
Orr-Ewing, Ian L. (Weston-super-Mare)


Dodds-Parker, A. D.
Hutchison, James (Scotstoun)
Partridge, E.


Donaldson, Cmdr. C. E. McA.
Hyde, Lt.-Col. H. M.
Peake, Rt. Hon. O


Donner, P. W.
Hylton-Foster, H. B. H.
Perkins, W. R. D.


Doughty, C. J. A.
Jenkins, R. C. D. (Dulwich)
Pete, Brig. C. H. M


Douglas-Hamilton, Lord Malcolm
Jennings, R.
Peyton, J. W. W.


Drayton, G. B.
Johnson, Eric (Blackley)
Pickthorn, K. W. M.







Pitman, I. J.
Smithers, Sir Waldron (Orpington)
Tweedsmuir, Lady


Powell, J. Enoch
Snadden, W. McN.
Vane, W. M. F.


Prior-Palmer, Brig O. L.
Soames, Capt. C.
Vaughan-Morgan, J K


Profumo, J. D.
Spearman, A. C. M.
Vosper, D. F.


Raikes, H. V.
Speir, R. M
Wakefield, Edward (Derbyshire, W.)


Rayner, Brig. R
Spence, H. R. (Aberdeenshire, W.)
Wakefield, Sir Wavell (Marylebone)


Redmayne, E.
Stanley, Capt. Hon. Richard
Ward, Hon. George (Worcester)


Remnant, Hon. P.
Stevens, G. P.
Ward, Miss I. (Tynemouth)


Robinson, Roland (Blackpool, S.)
Steward, W. A. (Woolwich, W.)
Waterhouse, Capt Rt. Hon. C.


Robson-Brown, W.
Stewart, Henderson (Fife, E.)
Webbe, Sir H. (London amp; Westminster)


Rodgers, John (Sevenoaks)
Storey, S.
Wellwood, W.


Roper, Sir Harold
Strauss, Henry (Norwich, S.)
White, Baker (Canterbury)


Russell, R. S.
Stuart, Rt. Hon. James (Moray)
Williams, Rt. Hon. Charles (Torquay)


Ryder, Capt. R. E. D.
Studholme, H. G.
Williams, Gerald (Tonbridge)


Salter, Rt. Hon. Sir Arthur
Summers, G. S.
Williams, Sir Herbert (Croydon, E.)


Savory, Prof Sir Douglas
Sutcliffe, H.
Wills, G.


Schofield, LL-Col. W. (Rochdale)
Taylor, William (Bradford, N.)
Wilson, Geoffrey (Truro)


Scott, R. Donald
Thorneycroft, R. Hn. Peter (Monmouth)
York, C.


Scott-Miller, Cmdr, R.
Thornton-Kemsley, Col. C. N.



Shepherd, William
Turner, H. F. L.
TELLERS FOR THE NOES:


Simon, J. E. S. (Middlesbrough, W.)
Turton, R. H.
Mr. Butcher and




Mr. Richard Thompson.

8.30 p.m.

The following Amendments stood upon the Order Paper in the name of Mr. GAITSKELL:

In page 14, line 16, at end, insert:
(4) After subsection (1) of section two hundred and twelve of the said Act (which relates to relief in respect of children) there shall be inserted the following subsection—
(1A) For the purpose of subsection (1) of this section an adopted child entered on the adopted children register under the Adoption Act, 1950 (including any register deemed to be part of such adopted children register) shall be deemed to be the child of the adopter or adopters entered on the said register and not of the child's parent or parents.

In page 14, line 16, at end, insert:
(4) After subsection (2) of section two hundred and twelve of the said Act (which relates to relief in respect of children) there shall be inserted the following subsection—
(2A) For the purpose of subsection (2) of this section a person who has undertaken for reward the nursing and maintenance of an infant under Part VII of the Public Health Act, 1936, Part XIII of the Public Health (London) Act, 1936, or Part I of the Children and Young Persons (Scotland) Act, 1937, or of a child boarded out by a local authority under Part II of the Children Act, 1908, shall be deemed to have custody of and to maintain at his own expense the infant or child:
Provided that from any relief to which but for this proviso such a person would be entitled there shall be deducted the amount of tax at the standard rate on such reward as aforesaid received during the year of assessment.

The Deputy-Chairman (Mr. Hopkin Morris): These Amendments are out of order. The next Amendment to be selected is that in the name of the Chancellor of the Exchequer.

Mr, Mitchison: On a point of order. Do I understand that you have ruled out

the two Amendments in the name of my right hon. Friend the Member for Leeds, South (Mr. Gaitskell), both relating to page 14, line 16.

The Deputy-Chairman: Yes. The effect of each of those two Amendments is to change the incidence of the tax, and they are therefore beyond the scope of the Ways and Means Resolution.

Mr. Mitchison: I understand that neither of those Amendments have that effect, and I therefore wish to raise two points of order.
On the first point of order, I submit that the first Amendment does not change the incidence of the tax. It can be said to do so only upon the ground that the natural, and not the adoptive, parent would be entitled to this relief. In my submission, that interpretation is inconsistent with the Adoption Act, which provides that the rights and liabilities of the parent in respect of a child shall be transferred to the adopter, and that on the creation of an adoption order they shall, as regards the parent or parents, be extinguished.
I submit that the right to an Income Tax relief of this character is a right in relation to the maintenance of a child, and that before there is any question of the operation of this proposal that right has been extinguished already. A child cannot appear on an adopted-children register until an adoption order has been made and until, accordingly, the rights of the parents have been extinguished already.
I beg to submit, therefore, that the Amendment does not have the effect of imposing any additional burden on the original parent or alter the position in


any way as regards that parent. It really effects an improvement, in relation to the Revenue, of the position of the adoptive parent. I shall raise the second point of order subsequently.

The Deputy-Chairman: I must rule that before the adoption is completed the Amendment may transfer the incidence of the burden, and the Amendment has, on that ground, been ruled out of order.

Mr. Mitchison: With the greatest respect, I think that that cannot be right. The Amendment can only have effect as regards a child on the adopted-children register, and a child cannot get on to that register until an adoption order has been made and until the rights of the parent have accordingly been extinguished. I therefore venture to suggest tthat, in point of time as well as on other grounds, I am correct in saying that there is no shred of right at all. There is merely a provision which will reduce the burden by the Revenue on the adopter.

The Deputy-Chairman: I have listened with great care to the argument of the hon. and learned Member. I am advised that the Amendment goes beyond the scope of the Resolution agreed to by the Committee of Ways and Means, and I must therefore rule it out of order.

Mr. Glenvil Hall: I have also listened carefully to what my hon. and learned Friend the Member for Kettering (Mr. Mitchison) has said, as I think we all have, and it is my view that he made out an extremely good case. What he said carried with it the absolute unanimity of the Committee. [An HON. MEMBER: "No."] Well, perhaps not quite. At any rate, on this side of the Committee we feel that my hon. and learned Friend has a point, although I realise that as you have given your Ruling, Mr. Hopkin Morris, it may not be possible for you to go back upon it.
I wonder whether the Financial Secretary to the Treasury, who has been sitting here, who has some knowledge of the law, and knows the Act which has been cited, can give us an assurance that between now and the Report stage the Treasury will look at this matter. If there is something in the point made by my hon. and learned Friend, I am sure that they will do something to put right what is obviously an injustice.

Mr. Boyd-Carpenter: I imagine that I shall not be in order in giving an assurance in these circumstances upon an Amendment which you, Mr. Hopkin Morris, have ruled out of order and which the Committee are not discussing. The most I can say to the right hon. Gentleman is that what has been said will no doubt appear in HANSARD, so that he who runs may read.

Mr. Mitchison: On my second, and better point of order, the case that I respectfully submit with regard to the second Amendment is completely watertight. The Amendment affects Section 212 of the Income Tax Act, 1952. Subsection (1) deals with a claim in respect of the claimant's child. It is completely unaffected by the proposed Amendment, which relates to subsection (2). 'This subsection relates to a claimant who has the custody of, and maintains at his own expense, a child. Later on, the subsection provides for the claimant to show that there is no claim, or that the claim has been waived under subsection (1). Accordingly, under the Amendment, there can be no question of affecting in any way the rights of a parent.
What I suppose to be the objection is that the Amendment may deal with cases where someone has boarded out a child and could otherwise have had a claim to relief under the Section. I submit with great respect that it cannot so deal, for the reason that, apart from the question of the custody of the child, the person who maintains a boarded-out child, whether at his own expense or, as is far more likely, at the expense of someone else, is the foster parent.
That that is so is abundantly borne out by the language of the Act to which I am referring. In the Public Health Act, 1936, there is express reference, first of all to a person who undertakes for reward the nursing and maintenance of the child. A person who undertakes the maintenance of a child, and carries out that undertaking, is the one who maintains the child, whether he does it at his own expense or at the expense of anyone else. Thus, yet again, in the following Section of the Public Health Act we get references to a change of residence by the foster parent, who is described as a person who is maintaining a foster child.
Accordingly, if a child is boarded out in this way, in no instance can anyone be entitled to claim in respect of the maintenance, whatever may be said about the custody, except the foster parents. Therefore, we are not depriving the uncle or the stranger of any possible relief any more than we are depriving the parent. Therefore, I submit, respectfully and with confidence, that this cannot possibly be a case in which a burden is shifted. This is an entirely new demand on the Revenue.
If I may have the attention of the Committee for a further moment, may I point out that foster parents in these circumstances can easily, and very often do, show that no one else has a claim, for that is required under subsection (2), hut they are in the constant difficulty of being unable to show that they have the custody and maintenance at their own expense. I am informed that, in practice, concessions are made from time to time. I recognise that on a point of order I cannot go into that, but it illustrates the fact that the person who is alone entitled, if anyone, is the foster parent. That is obviously so where the boarding out is done by a local authority, for a local authority cannot have a personal allowance of this character under the Act.
I have endeavoured to submit that it applies equally in the other cases where the boarder-out—if I may use the term as distinct from the boardee-out—is the parent or other relative or a complete stranger. Therefore, I submit respectfully that this Amendment is in order and does no more than lighten the burden on the taxpayer.

The Deputy-Chairman: I regret that I must again rule against the hon. and learned Member. In stating that argument he has already stated the argument against this Amendment being in order. We will pass on to the Amendment of the Chancellor of the Exchequer.

Mr. Maudling: I beg to move, in page 14, line 25, at the end, to insert:
(5) In section two hundred and sixteen of the said Act (under which a relief is given to a person maintaining a dependent relative with a total income not exceeding one hundred and thirty pounds a year, but the relief is reduced where the relative's total income exceeds eighty pounds a year) a reference to one hundred and thirty-five pounds shall be substituted for the reference to one hundred and thirty pounds, and a reference to eighty-five pounds for the reference to eighty pounds.

The effect of this Amendment will be to continue what has become recently a normal practice in regard to the dependant's allowance when the old age pension is raised. The dependant's allowance of £50 is only granted in full when the income of the dependant does not exceed £80. After that, an allowance of £50 is reduced £ by £ as the dependant's income rises to a maximum of £130, when the dependant's allowance ceases altogether.
It has been the practice for some years that the miinimum figure for the dependant's allowance should be strictly related to the old age pension, and that it should be increased when the old age pension is increased. For example, in 1947 when the old age pension was increased to 26s. a week, that is, £67 10s. a year, the income limit went up to £70. Last year, when the old age pension was increased to £78 a year, the income limit for full relief was increased to £80. As the Committee is aware, this year there is an increase in the old age pension to the equivalent to £84 10s. a year and so, continuing the practice established in recent years, the effect of this Amendment would be to raise the minimum to £85 and the maximum £50 higher, to £135.

Mr. Houghton: There is only a slight difference between the Amendment moved by the hon. Gentleman and the one lower down on the same page in the name of my right hon. Friend the Member for Leeds, South (Mr. Gaitskell), and other of my hon. Friends, namely, in page 14, line 25, at end, insert:
(5) Subsection (1) of section two hundred and sixteen of the Income Tax Act, 1952 (which relates to the total income of dependent relatives) shall be amended by substituting the words "one hundred and forty pounds a year," for the words "one hundred and thirty pounds a year," and the words "ninety pounds a year," for the words "eighty pounds a year.
Therefore, we do not wish to press our Amendment. Otherwise it would have been convenient for the two to be considered together. The arithmetic of the Chancellor is a little finer than our own. He has carried the increased weekly pension to an annual sum with arithmetical accuracy, whereas we thought there might be a baker's dozen, a little thrown in, that we might go to the nearest £10, rather than restrict the allowance to almost the exact annual equivalent of the weekly amount of the retirement pension.
8.45 p.m.
Of course, the Amendment is liberal to the extent that it will concede the allowance on the higher basis for the whole of the financial year, whereas the increased pensions will not operate until a little later in the year; but it is clearly convenient to deal with this year and to deal with it as a complete year.
How much longer it will be necessary to adjust the dependent relative allowance to a rising scale of social security payments, I do not know. This is clearly one matter, perhaps, which would be suitably considered by the Solicitor-General's wonderful standby: a Royal Commission. Certain aspects of its relationship between the dependent allowance and the level of social security payments clearly need examination.
There are other aspects of the allowance which call for attention also, but the Amendment deals with the narrow question of the money limits of the allowance, and I do not want to dwell on these other things. We on this side are grateful to the Chancellor for adjusting the allowance to the new level of social insurance payment, and we will not press our own Amendment.
Amendment agreed to.

Mr. E. Fletcher: I beg to move, in page 14, line 25, at the end, to insert:
(5) Subsection (1) of section two hundred and fourteen of the Income Tax Act, 1952 (relating to an allowance in respect of a person taking charge of a widower's or widow's children or acting as his or her housekeeper) shall be amended by substituting the words "seventy-five pounds," for the words "fifty pounds.
(6) Section two hundred and fifteen of the Income Tax Act, 1952 (which provides for an allowance in respect of a relative taking charge of unmarried person's young brother or sister) shall be amended by substituting the words "seventy-five pounds," for the words "fifty pounds.
(7) Section two hundred and eighteen of the -Income Tax Act, 1952 (relating to a person employed or maintained to take charge of children) shall be amended by substituting the words "seventy-five pounds," for the words "fifty pounds.
The proposed additional words are designed to introduce changes in Sections 214, 215 and 218 of the Income Tax Act, 1952. This is an Amendment which we shall press and which, I hope, the Government will concede.
Shorn of technical language, the object of the Amendment is, in common parlance, to increase the housekeeper allowance from the present rate of £50 to a rate which, we suggest, is just and equitable: namely, £75. You will be surprised, Mr. Hopkin Morris, to hear that whereas all other personal allowances have been raised, either by the previous Government or in this year's Budget, the housekeeper allowance has remained static for over 20 years. It has been £50 since 1931. The curious thing is that as long ago as 1924 it was higher than it is today.
On what grounds can it be suggested that all other personal allowances should be raised in accordance with the trend of the time but that the housekeeper allowance should be left where it is for more than 20 years? The proposition only has to be stated in these clear and simple terms to make its absolute justice manifest to all.
Let me remind the Committee how the other allowances have been increased. For example, the personal allowance, which used to be £80, is now £120. The married allowance, which used to be £180 for a man and his wife, is now £210. To take the allowance for a wife alone, it has been raised from £80 to £90. The child's allowance was raised in the last Budget and quite properly, has been raised again in this Budget, although we do not think it has been raised by as much as it should have been. But whereas the child allowance was formerly £50 and is now £85, and the dependent relative allowance, which used to be £25, has in the course of the years been raised to £50, the surprising thing is that the housekeeper allowance still remains at £50.
The effect of that is to penalise widows, widowers and other taxpayers who, for one reason or another, have to look after young children. Why should they be penalised in this way? If it is just—and it is—to have increased the married allowance, which has now gone up to £90, how can the Financial Secretary to the Treasury defend leaving the housekeeper's allowance at £50? Does he not realise that it is just as necessary for a widower to keep pace with the rising cost of living as it is for the married man with a wife? Does he not know that it is even more expensive if one unfortunately has suffered bereavement and is a widower


and has to employ a housekeeper than if one is happily married?
One of our learned judges said last week that the wisest and cheapest kind of housekeeper is a wife. That may be debatable, but what I think is true is that in the ordinary circumstances it is more expensive for a widower who has to employ a housekeeper to look after his children than it is for a married man.
This Amendment is not confined to the case of widowers but applies equally to widows and, perhaps, to a limited number of cases of individual taxpayers who have the care of young children, either of members of their family or in other circumstances, and have to maintain a resident housekeeper to look after those children. The Financial Secretary is a just man and it is no use his trying to avoid the force of argument by taking refuge in private conversation. He knows as well as I do the justice of this argument.
I do not know what the cost would be, but, as far as I can calculate, it would be relatively insignificant. It might amount to £3 million or £4 million a year. What is that compared with the surplus of £500 million which the hon. Gentleman's friends on the back benches suggest should be distributed as largesse to the higher ranges of Income Tax payers? It is a mere bagatelle compared with that. The allowance has been raised for the single man and for the married man, and the children's allowance has been raised, but unhappy widowers and others, notwithstanding that they have to meet the same increased cost of living, are still given the same allowance for a housekeeper as has been given for 20 years.
I hope I have said sufficient to make the case to the satisfaction of the Financial Secretary and, if not, to the satisfaction of the Committee, and I hope that hon. Members will support me in pressing this Amendment.

Mr. Maudling: The hon. Member for Islington, East (Mr. E. Fletcher) has moved this Amendment in the most persuasive terms and I can tell him straight away that the cost of granting this concession would be less than he supposes. It is a proposition which commends itself, and has commended itself, to hon. Members on both sides of the Committee, not only this year but in previous years. I

think that in having to turn down the suggestion I shall have to plead in aid the argument used by his right hon. Friend the Member for Battersea, North (Mr. Jay), on an almost precisely similar case last year.
The hon. Member for Islington, East, is right in saying that the allowance has not changed since 1931. It may be that since then every Financial Secretary has advanced the same argument. These three different allowances, all of which go together, are particularly designed to assist people making provision for the maintenance of children. It is important to point out that already in his Budget the Chancellor has made provision for an increased allowance of £15 for anyone maintaining a child. Therefore, the point about assisting in the maintenance of children has already been met.
There remains the argument that the housekeeper is analogous to the wife in certain respects, as the hon. Member has pointed out. That is in some ways a persuasive argument. I advanced it myself last year, so naturally I think it rather persuasive. It was rejected by the then Financial Secretary on the grounds that there was no real analogy that could be drawn in these matters.
Since 1931 this figure has always been consistently maintained. It is not right to draw an analogy in this matter between the wife's personal allowance and the personal allowance granted in respect of a housekeeper. After all, a housekeeper who is looking after a widow or widower with no children is in the position of a domestic servant or anyone else who assists in the household. That does not seem to be any strong reason why that allowance should be automatically increased.
This is undoubtedly a matter of principle. Is it right in principle, as some people argue—so far they have always done so unsuccessfully—to say that
there should be a relation between the housekeeper allowance, apart from the maintenance of children aspect of it, and the allowance for a married person? That being a matter of principle, I suggest that it is pre-eminently a suitable matter for the Royal Commission.
I would point out that when last year we tried, from the other side of the Committee, to move quite a number of


Amendments dealing with matters that had been considered by the Millard Tucker Committee, the then Chancellor of the Exchequer was not prepared to consider them at the time because, although that Committee had already reported, he had not had time to study their recommendations in detail. A fortiori we are justified in saying that these matters, which are complex and a change in respect of which would give rise to very wide ramifications, it would be wise to have the benefit of the advice of the Royal Commission which has been established and is already sitting to consider precisely this type of point, among other things, of course.
I hope I have said enough to indicate that we do not regard this Amendment with lack of sympathy, but I ask the Committee not to accept it on the grounds put forward, and which have been advanced, with great respectability, by hon. Gentlemen opposite in previous years.

Mr. Anthony Crosland: (Gloucestershire, South): I wish to make a point about the fact of the Royal Commission being used as an excuse by the Government Front Bench for saying that because matters are being considered by that Commission nothing should be done. We are glad to see that the hon. Member for Barnet (Mr. Maudling) has so little to do with civil aviation that he has time to come to speak on matters of finance in which we know he is interested.
He has used the analogy of the Millard Tucker Committee, and the Financial Secretary has used that argument. There is no analogy, because the Millard Tucker Committee was set up to consider a number of extremely detailed, complex and subtle points of company finance. On points as detailed and difficult as those, it was reasonable to say that the Report of that expert Committee was required before the Government could come to a decision. The Royal Commission was not set up for this purpose at all, though one might have got that impression from the Financial Secretary and the hon. Member for Barnet.
The Royal Commission on Taxation was set up to consider such major issues as the taxation of distributed as opposed to undistributed profits, whether corporate taxation as a whole was bearing too

heavily, the relation of taxation and incentives, etc. It was not set up primarily to consider small matters involving particular allowances against Income Tax.
The same excuse has been used previously, very unconvincingly, by the Solicitor-General, about the £13 limit. I think that some protest should be made from this side of the Committee if this sort of thing is to go on for the rest of this stage of the Finance Bill. It is misusing the whole purpose for which the Royal Commission was set up to say that nothing can be done on these small questions of Income Tax reliefs and allowances until the Royal Commission has reported.
If the Government and the Royal Commission go on at their present rate, the Commission will not report in the lifetime of the hon. Member. There was a certain dispute about the chairmanship of the Royal Commission, as a result of which it did not sit for three months. I believe I am correct in saying it has not sat even since the new Chairman was appointed, and that the last time the Royal Commission sat was somewhere about last October. In view, therefore, of the negligibly rapid progress, the practically non-existent progress of the Commission, it does seem intolerable that every single Amendment, or any form of proposal from this side of the Committee, is to be met by this nonsensical alibi of the Royal Commission.

9.0 p.m.

Mr. Houghton: I would agree that there are a number of matters connected with the housekeeper allowance which would be suitable for examination by the Royal Commission, but the amount of the allowance is not one of them. The Royal Commission may study some of the complexities and anomalies, or difficulties of administration of the existing allowances of this kind, but one thing they are unlikely to do is to recommend to the Chancellor that the amount of allowances should be altered, when they know full well that revenue will depend on any changes which might be made.
Moreover, the Royal Commission are not to know, and it is probably not within their terms of reference to say, what should be the relative priorities for the Chancellor of the Exchequer in matters of changes in personal allowances. There are some difficult questions


about the residential qualifications of a housekeeper which the Royal Commission might wish to unravel. There is another important question about why should housekeepers always be females. Some men are better housekeepers than women. Why should not they be employed as housekeepers?
There is probably a good case for allowing a widow in her loneliness to employ a male housekeeper. Yet under the existing law she is not entitled to claim a housekeeper allowance, because it must be a female person who is employed as a housekeeper. All this, I will grant to the hon. Gentleman, may go to the Royal Commission, but if hon. Members opposite want to quote the Royal Commission as an alibi for every Amendment which is moved, the sooner the whole of the Commission are called to the Bar of this Committee to hear what we have to say the better.
This allowance, as has been stated, has remained unchanged for a long time. It may be that the Chancellor wishes to distinguish in his own mind between the allowance for a housekeeper to be given to a person who has young children, and the amount to be given for a housekeeper where the taxpayer has no young children, as in the case of a childless widower; where under the existing law the same type of allowance may be granted for the two different kinds of housekeeper. But while a debate may go on as to where the differential in amount of allowance should be introduced, there is the present case of housekeepers, in whatever circumstances they are employed or serving, who are receiving, so far as the taxpayer is concerned, the same allowance as long before the war.
By reference to all other changes which have been made, there is a case for adjustment, and it can be done for a small amount of money. If the right hon. Gentleman is proposing to charge my right hon. Friend the Member for Battersea, North (Mr. Jay) with having resisted this Amendment last time—las we are so frequently charged with having resisted things we are now proposing—all I can do is to quote the Prime

Minister. He said that as circumstances change events moved forward. That was his alibi for not doing what he said he would do. That is our alibi for now proposing what last year we said could not be done.

Mr. Jay: May I make clear that when I welcomed the Parliamentary Secretary to the Ministry of Civil Aviation I did not mean to imply that we did not wish to hear the Minister of State for Economic Affairs again at all in these debates? I hope my remarks were not taken as putting a ban on the Minister for the rest of the discussions on this Bill. Nor would we wish to keep the Parliamentary Secretary entirely away from Civil Aviation, because I am sure that the co-ordination of transport might then suffer even more than it has already.
Whatever I said last year about this particular allowance, I am sure I did not blame it on the Royal Commission on Taxation and Income Profits. I think it is correct to say that that Royal Commission had not then started work. In addition to what my hon. Friends have said about the Royal Commission argument, I wish to say that there is no validity in it at all. This Royal Commission was sitting when the Chancellor introduced his Budget in March, but it did not prevent him from making extensive changes in the child allowances, the marriage allowance and the earned income allowance.
If the existence of this Royal Commission had made it impossible to carry out any changes in these allowances, it would have been impossible for him to introduce that Budget. If, on the other hand, it is possible for him to change these allowances in his Budget, clearly it is possible, as far as the Royal Commission is concerned, to make a change such as the one we suggest. There is no substance in that argument. If neither the hon. Gentleman nor the Minister of State can produce a better one, we must press this Amendment to a Division.

Question put, "That those words be there inserted."

The Committee divided: Ayes, 231; Noes, 231.

Division No. 138.]
AYES
[9.7 p.m.


Adams, Richard
Anderson, Frank (Whitehaven)
Bacon, Miss Alice


Albu, A. H.
Attlee, Rt. Hon. C. R.
Baird, J.


Allen, Arthur (Besworth)
Awbery, S. S.
Balfour, A.


Anderson, Alexander (Motherwell)
Ayles, W. H.
Barnes, Rt. Hon. A. J.




Bartley, P.
Hall, John (Gateshead, W.)
Paling, Will T. (Dewsbury)


Bellanger, Rt. Hon. F. J
Hamilton, W. W.
Pannell, Charles


Bence, C. R.
Hannan, W.
Pargiter, G. A


Benn, Wedgwood
Hardy, E. A.
Parker, J.


Benson, G.
Hargreaves, A.
Paton, J.


Bing, G. H. C.
Harrison, J. (Nottingham, E.)
Peart, T. F.


Blackburn, F.
Hastings, S.
Poole, C. C.


Blenkinsop, A.
Hayman, F. H.
Porter, G.


Blyton, W. R.
Henderson, Rt. Hon. A. (Rowley Regis)
Price, Joseph T. (Westhoughton)


Boardman, H.
Herbison, Miss M.
Proctor, W. T.


Bottomley, Rt. Hon. A. G.
Holman, P.
Pursey, Cmdr. H.


Bowden, H. W.
Holt, A. F.
Reeves, J.


Braddock, Mrs. Elizabeth
Houghton, Douglas
Reid, Thomas (Swindon)


Brockway, A. F.
Hoy, J. H.
Rhodes, H.


Brook, Dryden (Halifax)
Hubbard, T. F.
Richards, R.


Brown, Rt. Hon. George (Belper)
Hudson, James (Ealing, N.)
Robens, Rt. Hon. A


Brown, Thomas (Ince)
Hughes, Cledwyn (Anglesey)
Roberts, Albert (Normanton)


Burke, W. A.
Hughes, Hector (Aberdeen, N.)
Rogers, George (Kensington, N.)


Burton, Miss F. E.
Hynd, J. B. (Attercliffe)
Ross, William


Butler, Herbert (Hackney, S.)
Irvine, A. J. (Edge Hill)
Royle, C.


Carmichael, J.
Irving, W. J. (Wood Green)
Schofield, S. (Barnsley)


Castle, Mrs. B. A
Isaacs, Rt. Hon. G. A
Shackleton, E. A. A.


Champion, A. J.
Janner, B.
Shawcross, Rt. Hon. Sir Hartley


Chapman, W. D.
Jay, Rt. Hon. D. P. T.
Silverman, Julius (Erdington)


Chetwynd, G. R
Jeger, Dr. Santo (St. Pancras, S.)
Simmons, C. J. (Brierley Hill)


Clunie, J.
Jenkins, R. H. (Stechford)
Slater, J.


Coldrick, W.
Johnson, James (Rugby)
Smith, Ellis (Stoke, S.)


Collick, P. H.
Johnston, Douglas (Paisley)
Smith, Norman (Nottingham, S.)


Corbet, Mrs. Freda
Jones, David (Hartlepool)
Sorensen, R. W.


Cove, W. G.
Jones, Jack (Rotherham)
Soskice, Rt. Hon. Sir Frank


Craddock, George (Bradford, S.)
Jones, T. W. (Merioneth)
Sparks, J. A.


Crosland, C. A. R.
Keenan, W.
Steele, T.


Dalton, Rt. Hon. H.
Key, Rt. Hon. C. W.
Stewart, Michael (Fulham, E.)


Darling, George (Hillsborough)
Kinley, J.
Strachey, Rt. Hon. J.


Davies, A. Edward (Stoke, N.)
Lee, Frederick (Newton)
Sylvester, G. O.


Davies, Ernest (Enfield, E.)
Lever, Harold (Cheetham)
Taylor, Bernard (Mansfield)


Davies, Stephen (Merthyr)
Lever, Leslie (Ardwick)
Taylor, John (West Lothian)


de Freitas, Geoffrey
Lewis, Arthur
Taylor, Rt. Hon. Robert (Morpeth)


Deer, G.
Lindgren, G. S.
Thomas, Iorwerth (Rhondda, W.)


Delargy, H. J.
Logan, D. G.
Thomas, Ivor Owen (Wrekin)


Dodds, N. N.
MacColl, J. E.
Thurtle, Ernest


Donnelly, D. L.
McGhee, H. G.
Turner-Samuels, M.


Driberg, T. E. N.
McInnes, J.
Ungoed-Thomas, Sir Lynn


Ede, Rt. Hon. J. C.
McKay, John (Wallsend)
Viant, S. P.


Edwards, RI. Hon. Ness (Caerphilly)
McLeavy, F.
Wade, D. W.


Edwards, W. J. (Stepney)
MacMillan, M. K. (Western Isles)
Wallace, H. W.


Evans, Edward (Lowestoft)
Mallalieu, E. L. (Brigg)
Watkins, T. E.


Evans, Stanley (Wednesbury)
Mallalieu, J. P. W. (Huddersfield, E.)
Webb, Rt. Hon. M. (Bradford, C.)


Ewart, R.
Manuel, A. C.
Weitzman, D.


Fernyhough, E.
Marquand, Rt. Hon. H. A.
Wells, Percy (Faversham)


Field, W. J.
Mellish, R. J.
West, D. G.


Finch, H. J.
Messer, F.
Wheatley, Rt. Hon. John


Fletcher, Eric (Islington, E.)
Mitchison, G. R.
White, Henry (Derbyshire, N.E.)


Follick, M.
Moody, A. S.
Whiteley, Rt. Hon. W.


Forman, J. C.
Morgan, Dr. H. B. W.
Wigg, George


Fraser, Thomas (Hamilton)
Morris, Percy (Swansea, W.)
Wilkins, W. A.


Freeman, John (Watford)
Morrison, Rt. Hon. H. (Lewisham, S.)
Willey, Frederick (Sunderland, N.)


Gibson, C. W.
Mort, D. L.
Williams, Rev. Llywelyn (Abertillery)


Glanville, James
Moyle, A.
Williams, Ronald (Wigan)


Gooch, E. G.
Mulley, F. W.
Williams, Rt. Hon. Thomas (Don V'll'y)


Gordon Walker, Rt. Hon. P. C.
Neal, Harold (Bolsover)
Williams, W. R. (Droylsden)


Grenfell, Rt. Hon. D. R.
O'Brien, T.
Wilson, Rt. Hon. Harold (Huyton)


Grey, C. F.
Oldfield, W. H
Winterbottom, Richard (Brightside)


Griffiths, David (Bother Valley)
Oliver, G. H.
Woodburn, Rt. Hon. A


Griffiths, Rt. Hon. James (Llanelly)
Oswald, T.
Yates, V. F.


Grimond, J.
Padley, W. E



Hale, Leslie (Oldham, W.)
Paget, R. T.
TELLERS FOR THE NOES:


Hall, Rt. Hon. Glenvil (Colne Valley)
Paling, Rt. Hon. (Dearne Valley)
Mr. Pearson and Mr. Holmes




NOES


Aitken, W. T.
Banks, Col. C.
Braine, B. R.


Alport, C. J. M.
Barber, A. P. L.
Braithwaite, Sir Albert (Harrow, W.)


Amery, Julian (Preston, N.)
Baxter, A. B.
Braithwaite, Lt.-Cdr. G. (Bristol, N.W.)


Amory, Heathcoat (Tiverton)
Beach, Maj. Hicks
Brooke, Henry (Hampstead)


Anstruther-Gray, Major W. J
Bell, Ronald (Bucks, S.)
Brooman-White, R. C.


Arbuthnot, John
Bennett, F. M. (Reading, N.)
Buchan-Hepburn, Rt. Hon. P. G. T


Ashton, H. (Chelmsford)
Bevins, J. R. (Toxteth)
Bullard, D. G.


Assheton, Rt. Hon. R. (Blackburn, W.)
Birch, Nigel
Bullus, Wing Commander E. E.


Astor, Hon. J. J. (Plymouth, Sutton)
Bishop, F. P.
Burden, F. F. A.


Astor, Hon. W. W. (Bucks, Wycombe)
Black, C. W
Butcher, H. W.


Baker, P. A. D.
Bossom, A. C.
Butler, Rt. Hon. R. A. (Saffron Walden)


Baldock, Lt.-Cmdr. J. M
Boyd-Carpenter, J. A
Carr, Robert (Mitcham)


Baldwin, A. E.
Boyle, Sir Edward
Channon, H







Churchill, Rt. Hon. W. S.
Howard, Gerald (Cambridgeshire)
Peyton, J. W. W.


Clarke, Col. Ralph (East Grinstead)
Hudson, Sir Austin (Lewisham, N.)
Pickthorn, K. W. M.


Cole, Norman
Hudson, W. R. A. (Hull, N.)
Pitman, I. J.


Colegate, W. A.
Hulbert, Wing Cmdr. N. J.
Powell, J. Enoch


Conant, Maj. R. J. E
Hurd, A. R.
Prior-Palmer, Brig. O. L


Craddock, Beresford (Spelthorne)
Hutchison, Lt.-Com Clark (E'b'rgh W.)
Profumo, J. D.


Crookshank, Capt. Rt. Hon. H. F. C.
Hyde, Lt.-Col. H. M
Raikes, H. V.


Crosthwaile-Eyre, Col O. E
Hylton-Foster, H. B. H.
Rayner, Brig. R.


Crouch, R. F.
Jenkins, R. C. D. (Dulwich)
Remnant, Hon. P


Crowder, Petre (Ruislip—Northwood)
Jennings, R.
Roberts, Peter (Heeley)


Darling, Sir William (Edinburgh. S)
Johnson, Eric (Blackley)
Robinson, Roland (Blackpool, S.)


Deedes, W. F.
Johnson, Howard (Kemptown)
Robson-Brown, W.


Digby, S. Wingfield
Jones, A. (Hall Green)
Rodgers, John (Sevenoaks)


Dodds-Parker, A. D.
Kaberry, D.
Roper, Sir Harold


Donaldson, Cmdr. C. E McA
Keeling, Sir Edward
Russell, R. S.


Donner, P. W.
Kerr, H. W. (Cambridge)
Ryder, Capt. R. E. D.


Doughty, C. J. A.
Lambert, Hon. G.
Salter, Rt. Hon. Sir Arthur


Douglas-Hamilton, Lord Malcolm
Lambton, Viscount
Schofield, Lt.-Col. W. (Rochdale)


Drayson, G. B.
Lancaster, Col. C. G.
Scott, R. Donald


Drewe, C.
Langford-Holt, J. A
Scott-Miller, Cmdr. R.


Dugdale, Maj. Rt. Hn. Sir T (Richmond)
Law, Rt. Hon. R. K
Shepherd, William


Duncan, Capt. J A L
Leather, E. H. C.
Simon, J. E. S. (Middlesbrough, W.)


Duthie, W. S.
Legh, P. R. (Petersfield)
Smithers, Sir Waldron (Orpington)


Eccles, Rt. Hon. D. M.
Linstead, H. N.
Snadden, W. McN


Elliot, Rt. Hon. W E
Lockwood, Lt.-Col J. C.
Soames, Capt. C


Erroll, F. J
Low, A. R. W.
Spearman, A. C. M


Fell, A.
Lucas, P. B. (Brentford)
Speir, R. M.


Finlay, Graeme
Lucas-Tooth, Sir Hugh
Spence, H. R. (Aberdeenshire, W.)


Fisher, Nigel
Lyttelton, Rt. Hon. O.
Spens, Sir Patrick (Kensington, S.)


Fleetwood-Hesketh, R. F.
McCorquodale, Rt. Hon. M. S
Stanley, Capt. Hon. Richard


Fletcher-Cooke, C
Macdonald, Sir Peter (I. of Wight)
Stevens, G. P.


Foster, John
Mackeson, Brig, H. R.
Steward, W. A. (Woolwich, W.)


Fraser, Hon. Hugh (Stone)
McKibbin, A. J.
Stewart, Henderson (Fife, E.)


Fyfe, Rt. Hon. Sir David Maxwell
McKie, J. H. (Galloway)
Storey, S.


Gage, C. H.
MacLeod, Rt. Hon. Iain (Enfield, W.)
Strauss, Henry (Norwich, S.)


Galbraith, Cmdr T D (Pollok)
MacLeod, John (Ross and Cromarty)
Stuart, Rt. Hon. James (Moray)


Galbraith, T. G. D. (Hillhead)
Macmillan, Rt. Hon Harold (Bromley)
Studholme, H. G


Garner-Evans, E. H
Maitland, Comdr. J. F. W. (Horncastle)
Summers, G. S.


George, Rt. Hon. Maj G. Lloyd
Maitland, Patrick (Lanark)
Sutcliffe, H.


Godber, J. B.
Manningham-Buller, Sir R. E.
Taylor, William (Bradford, N.)


Gomme-Duncan, Col. A.
Marshall, Douglas (Bodmin)
Thompson, Lt.-Cdr. R. (Croydon, W.)


Gough, C. F. H
Maude, Angus
Thorneycroft, R. Hn. Peter (Monmouth)


Gower, H. R.
Maudling, R.
Thornton-Kemsley, Col. C N


Graham, Sir Fergus
Maydon, Lt.-Comdr. S. L. C
Turner, H. F. L.


Gridley, Sir Arnold
Medlicotl, Brig. F.
Turlon, R. H


Grimston, Hon. John (St. Albans)
Mellor, Sir John
Tweedsmuir, Lady


Grimston, Sir Robert (Westbury)
Molson, A. H. E.
Vane, W. M. F.


Harris, Frederic (Croydon, N.)
Moore, Lt.-Col. Sir Thomas
 Vaughan-Morgan, J K.


Harris, Reader (Heston)
Morrison, John (Salisbury)
Wakefield, Edward (Derbyshire, W.)


Harrison, Col. J. H. (Eye)
Mott-Radclyffe, C. E.
Wakefield, Sir Wavell (Marylebone)


Harvie-Watt, Sir George
Nabarro, G. D. N.
Ward, Hon. George (Worcester)


Heald, Sir Lionel
Nicholson, Godfrey (Farnham)
Ward, Miss I. (Tynemouth)


Heath, Edward
Nicolson, Nigel (Bournemouth, E.)
Waterhouse, Capt. Rt. Hon. C.


Higgs, J. M. C.
Nield, Basil (Chester)
Webbe, Sir H. (London amp; Westminster)


Hill, Dr. Charles (Luton)
Noble, Cmdr. A. H. P.
Wellwood, W.


Hill, Mrs. E. (Wythenshawe)
Nugent, G. R. H.
While, Baker (Canterbury)


Hinchingbrooke, Viscount
Nutting, Anthony
Williams, Rt. Hon. Charles (Torquay)


Hirst, Geoffrey
Oakshott, H. D.
Williams, Gerald (Tonbridge)


Holland-Martin, C. J.
Ormsby-Gore, Hon W. D.
Williams, Sir Herbert (Croydon, E.)


Hollis, M. C.
Orr, Capt. L. P. S.
Wills, G.


Holmes, Sir Stanley (Harwich)
Orr-Ewing, Ian L. (Weston-super-Mare)
Wilson, Geoffrey (Truro)


Hope, Lord John
Partridge, E.
York, C.


Hornsby-Smith, Miss M. P.
Peake, Rt. Hon. O.



Horobin, I. M.
Perkins, W. R. D.
TELLERS FOR THE NOES:


Horsbrugh, Rt. Hon Florence
Peto, Brig. C. H. M.
Mr. Vosper and Mr. Redmayne.


Question, "That this House doth agree with the Committee in the said Resolu-


tion," put forthwith, pursuant to Standing Order No. 86 (Ways and Means Motions and Resolutions), and agreed to.

Motion made, and Question proposed, "That the Clause, as amended, stand part of the Bill."

9.15 p.m.

Mr. Chapman: The Clause as it now stands perpetuates an anomaly to which I wish to draw attention in the hope that in future years, perhaps, we can get it rectified. It is an anomaly which I think the Parliamentary Secretary to the Ministry of Civil Aviation will again say is one which should be examined by the present

Royal Commission before he dares to give any advice to the Committee. However, I raise the matter at this point in the hope that even if he will not do anything to deal with the situation now, he will at least consider doing so next year.
As the Clause stands at present, points concerning the definition of a housekeeper are left in obscurity. If a female relative is appointed as a housekeeper, she must be resident with the widower who appoints her. Again, if the widower employs someone who is not a relative, he


has to prove that he has no female relative who could have looked after his children.
I suggest that those conditions attaching to the claiming of a housekeeper's allowance are totally anomalous and out of date in modern conditions. Surely in these days we cannot insist that a female relative appointed to look after a widower's children must actually reside on the premises before the housekeeper's allowance can be claimed. That seems totally anomalous, and, indeed, it gave rise to the well-known case of the Crown v. Adamson. The whole matter was further examined by the Joint Committee of the two Houses which produced the 1952 consolidation Act. The Committee refused to come down on either one side of the fence or the other concerning what amounts to "residence," or whether residence should be kept on as a definite condition in the claiming of the housekeeper's allowance.
It seems perfectly ridiculous, secondly, that before a widower can claim a housekeeper's allowance he should have to prove that he has no female relative who could do the job. If a widower chooses to employ another person, why should he be forced by law to turn down all his female relatives or to go through his family tree before he can prove to the Income Tax authorities that he should have an allowance for the person who is his housekeeper?
I think both these points leave the law—and, as I said, this was rather admitted by the Joint Committee which prepared this Act—to some extent an absurdity. I hope that by next year, now that we have some remarks on the subject on record, we shall get some slight amendment to this part of the Income Tax legislation in order to clear up the matter.

Captain Ryder: I wish to put forward a very narrow but important point raised in this Clause—the position of widows. I think I can best illustrate this by comparing cases where there are two in a family.
In the case of two single persons, the personal allowance aggregates £240. In the case of a married couple it works out at £210, but in the case of a widow with one child it works out at only £205. The widow with one child has the smallest personal allowance in aggregate, and

therefore she is taxed at a higher rate. It seems to me that this is not the way we would wish things to work out. It appears to have arisen through no intention but more by some freak in these personal allowances, which should receive the attention of the Chancellor of the Exchequer.
Last year I moved an Amendment on the Report stage of the Finance Bill to call attention to this matter. It was opposed not only in the Lobby but in a speech in the House by the right hon. Gentleman the Member for Battersea, North (Mr. Jay), and his hon. Friends. I was supported in my Amendment by my hon. and right hon. Friends on this side. In fairness to them, however, we have gone a very considerable way by increasing children's allowance this year, but there is still this discrepancy, and the widow with one child is still taxed at a higher rate.
These people are a section of the community which are least able to bear the higher tax. Single people living together, or a married couple, are in a far stronger position to go out and each earn a full wage than the widow who might find it difficult to earn more than a single part-time wage, and even then has to bear a relatively higher transport charge to and from her place of work. I hope that between now and the Report stage the Chancellor will see whether this discrepancy can be removed.

Mr. F. M. Bennett: I feel that, in view of the widespread and deliberate campaign in the country to denigrate the beneficial effect on P.A.Y.E. of the Budget proposals, hon. Members and the Government, in particular, might be interested in facts which take this question out of the realm of dispute whether millions will or will not benefit from the changes. I wish to bring the Committee down to earth by quoting a typical example from a factory in my constituency.
During the Second Reading debate the hon. Member for Reading, South (Mr. Mikardo), in a characteristically mischievous speech, brought up a large number of marginal cases and sought to prove that these changes in fact had no good effect on the average wage earner. I should like to read three short paragraphs from a letter sent to me from a factory in my constituency.
It states:
The total number of employees is 290, of which about 90 are women. Prior to the Budget, of these 290, 208 (or 71.7 per cent.) were paying Income Tax, and 82 (28.3per cent.) were free from Income Tax.
Under the new Budget proposals, of the 290 employees, 120 (41.4 per cent.) will pay Income Tax and 170 (58.6 per cent.) will not pay.
There will, of course, also be a reduction on the weekly P.A.Y.E. payment of the 120 employees estimated as taxable under the new proposals, but the amount is difficult to assess until the revised Tax Tables are sent to us.
When the propaganda clouds are dissipated by the implementation of the changes, millions of people will be grateful to the Chancellor.

Mr. E. Fernyhough: It would have been better if the hon. Member for Reading, North (Mr. Bennett), had given the total of taxation paid before and after the Budget proposals, respectively, and then, of course, we would have been in a position to assess what permanent benefit accrued from this wonderful Budget. However, I do not want to deal with that point, but rather to support the plea made by my hon. Friend the Member for Northfield (Mr. Chapman).
On Saturday one of my constituents came to see me; his wife had died recently and he had been left with three children. He is working in an engineering factory earning only modest wages, and he had been informed by the Inland Revenue that unless the people who came to assist him with the washing and looking after the children resided with him, there was no opportunity for him to get any relief for the money that he was paying for that assistance. That is most unfair. I do not believe that anybody would try to condone that state of affairs. While it may not be possible on this occasion for anything to be done to deal with such circumstances, I hope the Financial Secretary will bear that case in mind for the future—if the party opposite are fortunate enough to introduce another Budget.
The condition that such people as I have referred to, who render assistance, must reside on the premises may be almost impossible to fulfil, because the housing conditions in some of our industrial towns make it impossible to take in an additional adult of the opposite sex. In those circumstances, surely the Inland Revenue ought to have some regard to

this problem. I hope this will be borne in mind, so that that constituent of mine who is making a gallant effort to bring up three children in circumstances which are a tribute to his courage, tenacity and determination, and any other person finding himself in similar circumstances, will after the next Budget be able to get the relief to which they are certainly morally entitled.

Mr. Mott-Radclyffe: It is not very easy to draw a clear dividing line between the discussion which took place on Clause 10 about incentives and the discussion which has taken place on this Clause, because Clause 11 is obviously the incentive Clause. It is, in my view, the most constructive Clause in the whole of the Finance Bill.
We have had a good deal of exhortation during the last few years from hon. Members opposite—and we on this side have supported them—about increased production. But exhortations to increase production fall upon deaf ears if we apply to excess the principle of "The more you earn the less you keep." That is why it always seems to me a pity when any Chancellor tries to work against human nature instead of working with human nature. To that extent the tax concessions totalling £180 million in this Clause are wholly welcomed.
Hon. Members opposite frequently make the criticism that the tax concessions benefit those in the higher income groups at the expense of those in the lower income groups, on the grounds that those who are in the lowest income groups do not pay tax anyway. My hon. Friend the Financial Secretary to the Treasury has already dealt with that argument on the last Clause, and I do not want to add anything to it. I would only say that if the arguments of hon. Members opposite against the tax concessions in this Clause mean anything at all, they really mean that there must never be any tax revisions in any direction except upwards. They must mean that, because the larger the income the larger the tax and, therefore, the larger the tax relief in any concession given.
I do not accept the argument that anybody who earns £1,000 a year is a menace to society, or that anybody who is earning £2,000 a year has a double dose of original sin. Still less do I accept this argument when applied to


investment income. I would ask hon. Gentlemen opposite to make up their minds on which leg they wish to stand. They cannot in one breath condemn those who are earning a high income and in the next breath extol the virtues of savings, because it is the income from savings which is regarded, for tax purposes, as investment income.
9.30 p.m.
Although it may be a very unpopular thing to say, I would remind the Committee that we are a nation of 50 million people cooped up in a very small island, able to support from our own resources only about half the present population. We are very largely dependent for our standard of living upon that section of the community who, by hard work, ingenuity and good luck, or a combination of all three, is managing to earn incomes well above the lowest income group. It is to that section of the commuity that incentives are the most necessary.
The real incentive which drives a man to work harder is not wholely immoral. It is not that he wants to earn a lot of money in order to "blow" it. He wants to keep some of his earnings for the purpose for providing for his wife and family when he dies, or for himself in his old age. That is a wholely healthy urge. It is closely aligned to family life, and family life is one of the fundamental features of all civilised nations. For that reason I welcome the concessions, totalling £180 million, made by the Chancellor in Clause 11.

Clause, as amended, ordered to stand part of the Bill.

Clause 12 ordered to stand part of the Bill.

Clause 13.—(EXTENSION OF PROVISIONS RELATING TO W.R.N.S. TO ITS RESERVES.)

Motion made, and Question proposed, "That the Clause stand part of the Bill."

Mr. Crosland: Are we to have no explanation of this rather curious Clause from the Government Front Bench? I think that the least the Committee can ask is that there should be some explanation why this particular group of young ladies is singled out for an entire Clause to itself. There appears

to be some discrimination in favour of the W.R.N.S. as against the other women's Services.
I am bound to say that during the war there was discrimination in favour of the W.R.N.S., when they were singled out by being given a headdress and a uniform which were at least moderately glamorous. Moreover they singled themselves out even further by their more amiable and more forthcoming demeanour, as compared with the other women's Services, and in consequence of this the matrimonial rate amongst W.R.N.S. was very much higher than in the other two women's Services. But I think there should be some explanation why this Clause is inserted.
On a brief reading, it appears that some Minister is responsible for a quite glaring omission in the Income Tax Act, 1952. If so, the Committee must surely know which Minister was responsible. Was it the Minister of State, who presumably has to concern himself with these matters? If some Minister was responsible for this omission, why is no Minister responsible for co-ordination between the three women's Services? It may be that the hon. Lady the Member for Tyne-mouth (Miss Ward) is responsible, but she is not here.
The main ambiguity about this Clause is clearly the matter of what constitutes the reserves of the W.R.N.S. It is not clear what sort of reserves are kept by the W.R.N.S. It appears—though I am not at all sure that it is a proper suggestion—that they keep nothing at all in reserve. The normal comment is that they put all their goods in the shop window. I am not at all sure that this is not a slur upon them.
I am bound to say that, now we have reached the Clause, it is, above all, the opportunity for the Minister of State for Economic Affairs to give us one of those brief, lucid and pithy interventions of his to which we have become accustomed, and I hope that he will not allow himself to be crowded out by the Financial Secretary. At any rate, I hope that from one of the Government speakers we shall be given some explanation of what may be quite a serious matter and one which apparently would have gone through in total silence had I not performed the public duty of raising the matter.

Mr. Boyd-Carpenter: I am glad to be able to assure the hon. Member for Gloucestershire, South (Mr. Crosland), and the Committee that our intentions towards these young ladies are of the very highest. So far from imposing a discrimination upon them, we are removing a discrimination from them.
The position is this. Section 457 (3) of the Income Tax Act, 1952, as the Committee may recall, was a consolidation Act which re-enacted Section 30 (2) of the Finance Act, 1946, and I can assure the hon. Member that if any Minister neglected these young ladies in 1946 it was not a member of the present Government. That Section of the 1946 Act provides that relief from tax in respect of ration and analogous allowances shall be granted both to members of the Armed Forces and to women serving with the Forces in any of the capacities mentioned in the Schedule to the 1946 Finance Act. As at that time there was no such thing as the Reserve of the W.R.N.S., which was started in 1947, they were not included in the Schedule, and therefore do not get the advantages of the exemption from tax of ration allowances which go to the other members of the Armed Forces and Women's Services.
Similarly, the other tax arrangements which are made with respect to the Armed Forces, in connection with P.A.Y.E., do not so far apply to them. As the Committee will appreciate, certain of the provisions of P.A.Y.E., relating, for example, to what happens when they go out of work because of illness, are not applicable to the Armed Forces whose pay is not affected by their going sick. There are arrangements by regulation to exempt the Armed Forces from certain parts of the P.A.Y.E. rules. The W.R.N.S. Reserve has not had this advantage either, by reason of its exclusion from the Schedule to the 1946 Act. The effect of this Clause is to put them into the Schedule to the 1946 Act, as re-enacted in the consolidation Act of this year.

Clause ordered to stand part of the Bill.

Clause 14 ordered to stand part of the Bill.

Clause 15.—(SOURCES OF INCOME TAXABLE UNDER CASE III, IV OR V OF SCHEDULE D WHICH ARE DISPOSED OF OR CEASE TO YIELD INCOME.)

Motion made, and Question proposed, "That the Clause stand part of the Bill."

Sir F. Soskice: This is a long and complicated Clause extending over some three pages. It appears to deal with cases of income received from sources overseas which is not taxed at source, and the object of the Clause appears to be to deal with the effect of the provisions as to taxation on the previous year's income and to prevent the taxpayer from having to pay more tax than the income which he receives, which is the effect of some of the present provisions of the tax code, as I understand them.
As the Clause is drawn, it appears to give two separate options to the taxpayer. One is to elect to be treated for tax purposes as if he sold his overseas investment after it had ceased to bear income for two years. The other option is apparently to keep it for six years without its paying any income and, if he exercises his option, to be treated as if he acquired it when it first begins to pay income again.
That is what the Clause appears to do. It seems to be a useful Clause. It has the effect of preventing an injustice which at present falls upon the taxpayer, namely, his having to pay tax in respect of one year in which he does not receive any income from his investment. However, the Committee is entitled to an explanation of the working of this Clause, and I hope that the hon. Gentleman will be so good as to give us some idea of its object and of how it works.

Mr. Maudling: This Clause has been put down in fulfilment of an undertaking given last year by the right hon. and learned Gentleman in response to an Amendment moved by the hon. Member for Barnet (Mr. Maudling). Therefore, it has a respectable parentage and its effect is exactly that described by the right hon. and learned Gentleman.
At present, in certain circumstances, where a person has investment income from which tax is not deducted at source, and if he continue to hold that source of income but it no longer provides him with that income—for example, if no dividend


is paid—he will be taxed twice over because he is taxed on the basis of the receipts of the previous year.
This Clause provides that should he consequently dispose of the source of income after two years, he shall be able to treat it as if he had disposed of the source of income in the last year in which income arose from that source. Also we have gone further, and on grounds really of administrative convenience we have allowed the same option at the end of six years. If no income has arisen from that source at the end of that time, he can exercise that option, in which case, should income arise at a later date from that source, it will be treated as a new source of income. As the right hon. and learned Gentleman says, it is a useful provision of a slightly obscure nature. In view of that fact, and of its respectable parentage, I hope that he will be able to acquiesce in this Clause.

Clause ordered to stand part of the Bill.

Clause 16.—(EXPENDITURE BY MINING CONCERNS ON ABORTIVE EXPLORATION.)

Mr. Hugh Fraser: I beg to move, in page 19, line 4, at the end, to insert:
Provided that the references to expenditure in this subsection shall be deemed to include, in relation to a person carrying on such a trade in an overseas territory, any loss sustained by that person on the winding up of a body corporate formed for the sole purpose of searching for, or discovering and testing, mineral deposits.
I feel that hon. Members on all sides of the Committee should congratulate the Chancellor on introducing this Clause, which will ensure a proper return on expenditure which proves to be abortive by companies going out into the world to produce more oil or minerals. It is in line with the Millard Tucker Report of famous memory. I see the right hon. and learned Gentleman the previous Solicitor-General on the Front Bench opposite. He fought this Clause to the death last year, but no doubt he will welcome it in his secret heart tonight. Hon. Members on this side of the Committee, such as the hon. Members for Handsworth (Sir E. Boyle) and Oswestry (Mr. Ormsby-Gore), who moved a

similar Clause last year, while welcoming it, may feel that it does not go quite far enough.
Hon. Members are fully informed of the vital importance of maintaining ourselves throughout the world as the main drawers of oil and hewers of minerals, and this Clause will do a great deal to that end. Every day we see countries, such as America and France, giving more concessions in taxation to those persons who go out for the exploitation of raw materials. Every day we see an increasing shortage of raw materials and an increase in what is termed "abortive" expenditure.
From the series of speeches we made last year, and from their own personal knowledge, hon. Members will know that the average oil company, if it has an income of £1 million a year, has to spend up to half of that amount on searching for new oil wells. Every day the search for raw materials becomes more intense. Today, in Venezuela, they are drilling for oil down to 10,000 feet, whereas 10 years ago oil was being drilled at a depth of 1,500 feet or less 
We know to what lengths people have to go in the Orange Free State to get gold. We know that oil wells have to be floated out at sea in the Gulf of Mexico and off the Island of Trinidad. Everywhere one sees that the dangers of abortive expenditure—that is, money being spent without return—are growing. Therefore, I feel sure that Members on all sides of the Committee must welcome the Clause.
9.45 p.m.
But while the Chancellor has I believe, dealt fully with the economics of the problem, there is still a political problem, with which the Amendment seeks to deal. That political problem is simply that as the Clause stands, companies which have to set up offshoots or total subsidiaries in foreign lands are not protected. Members on all sides of the Committee, and especially on the other side, with the memory of Abadan burning hot, I hope, in their memories, must realise that today there is a natural growth of nationalism. to which certain concessions must be made. [HON. MEMBERS: "Oh"] But if those concessions are made in due time, instead of at the last minute, a great many things can be saved.

Mr. Fernyhough: Twenty years ago.

Mr. Fraser: Doubtless hon. Members will recall the case of the Argentine tram—and, of course, the Argentinians have a case. Doubtless, if an Argentine company were to own the London Passenger Transport Board, the right hon. Member for Lewisham, South (Mr. H. Morrison) would be in an extreme state of indignation about it, and so would many other people. But if the Argentine people were wise, they would have appointed the right hon. Member for Lewisham, South as one of the directors of the subsidiary holding company.

Mr. Mitchison: Would the hon. Member be good enough to tell us whether a tram is a mineral deposit?

Mr. Fraser: For the purpose of my argument, as the legal eagle who represents Kettering must know, my argument is more like a bus than a tram—it must be wandering slightly.
The point is that precisely the same argument which applied to the oil company in Persia or which applied to an imaginary-owned London Passenger Transport Board in this country, applies, unfortunately, today to the question of exploration companies. It is not merely a question of owning assets in a country. It is a question of seeing that that exploration is controlled to some extent by the country in which the exploration is carried out. We have seen recently demands from foreign countries that they should control, through registration of those companies, the exploration which was carried out by a British company.
All over South America we are seeing this. When a company like, say, one of the largest petroleum companies in this country, wishes to carry out research over one of the South American countries, that research can only be carried out if the South American country has controlled its exploration in so far as the exploration company is registered not in London, but in the capital of the South American country.
All that the Amendment seeks to do is to ensure that the spirit of the Clause is made more actual by bringing in wholly-owned subsidiary companies operating in foreign lands. Unless this is done, the economic advantage which has been offered, and rightly offered, by the Clause

to British operators overseas, will be nullified by the political disadvantages which must accrue unless they are able to carry out foreign registrations of subsidiary exploration companies.
I hope, therefore, that the Chancellor will see fit to accept this Amendment. The step forward which has been taken by this Clause is of supreme interest to this country. It means that all exploration companies, which bring so much into the Exchequer, will be given a real advantage by bringing them into line with many competitors seeking mineral wealth. I believe that my right hon. Friend might go even further and round off the work he has so well begun.

The Solicitor-General: My hon. Friend the Member for Stafford and Stone (Mr. H. Fraser), in moving his Amendment in such eloquent fashion, began with a tribute to my right hon. Friend for this Clause which does so much to alleviate the position of mining companies. He drew attention to the fact that the Clause implements the recommendations of the Millard Tucker Report and expounded his argument in favour of this proposal. I must remind him that this Amendment goes far beyond anything recommended in that Report.
Clause 16 deals with the expenditure of a company engaged in exploration, whereas the Amendment is designed to secure that the investing company, if it sustains a loss, shall be able to count that loss as a trading expense. Of course this Clause is not designed, and it is not within the scope of the Clause, to give relief for a capital loss due to one company financing another.
Secondly, the Millard Tucker Report did make certain recommendations with regard to the position in which one company contributed to or provided all the finance for another. That Report laid down certain conditions, namely, that the two companies should be resident in the United Kingdom and members of the same group. In that connection also this Amendment goes beyond the Millard Tucker Report, because the Amendment is limited to overseas.
This question of finance as between one company and another does raise problems of very considerable complexity and of difficulty and, while I can assure my hon. Friend that his speech in support of the


Amendment will be most carefully considered, I am afraid that I must disappoint him. It would be quite wrong to accept this Amendment on a Clause which is dealing entirely with expenditure of a particular kind of company for a particular purpose specified in the Clause.

Mr. Roy Jenkins: The Solicitor-General based his inability to accept the Amendment largely on the fact that it would go a good deal beyond the recommendations of the Millard Tucker Report. I wonder if he could tell us whether the Clause as it stands goes somewhat beyond those recommendations. The Report only suggested that such deduction should be allowed where the company did abortive exploration for the mineral which it was already working, whereas it appears that the Clause as it stands would extend the provision to any mineral or deposit within the meaning of the Clause.

Sir Edward Boyle: I listened with care to the explanation given by the Solicitor-General. I must confess I am a little disappointed that he cannot give us rather more encouragement, since the whole point of this Amendment is that it should act as a stimulus to the discovery of further mining deposits.
I refreshed my memory this evening of paragraph 240 of the Millard Tucker Report, and I think the hon. Member for Stechford (Mr. Roy Jenkins) is quite right in saying that the Clause does go rather further than the Report. Even so, I feel that the real object of the Clause will not be achieved until some allowance is given for losses incurred by mining concerns on advances to wholly-owned subsidiary prospecting companies, set up for specific explorations in overseas territories.
My hon. Friend the Member for Stafford and Stone (Mr. H. Fraser) pointed out that this is not only an economic issue; there is also an important political issue, because it is very often impossible for British overseas mining companies to secure authority to prospect in overseas territories unless they are willing for the job to be carried out by means of a locally-registered subsidiary.
While I understand the point of the Solicitor-General that this is a difficult question, and that the Clause as drafted

does not cover the case of a capital loss due to one company financing another, I hope that on some future occasion it may be possible to go beyond the present wording of this Clause in the direction we have indicated. As this is the second year in which I have supported my hon. Friend the Member for Stafford and Stone on this subject, I should like to give notice that I am sure it will not be the last time we shall be discussing this matter in the House.

The Solicitor-General: To reply to the point raised by the hon. Member for Stechford (Mr. Roy Jenkins), I would say that I was indicating that Clause 16 was in line with the Millard Tucker Report recommendations. He is quite right in that it goes one step in advance of those recommendations and in that respect is more favourable to the taxpayer. The recommendations were confined to expenditure by a company in relation to a mineral which that company was already working, whereas that condition is now dispensed with, which should be an advantage to all companies engaged in the discovery of minerals.

Mr. Roy Jenkins: Could we have a reason for that, as the Solicitor-General considers himself so closely bound elsewhere by the Millard Tucker Report?

Mr. Crosland: I should have thought there was a strong argument for going beyond the Millard Tucker Report, but I should like to know what the words in line 4 "in connection with that trade" mean. If that does not mean in respect of a mineral which the company is already working, what does it mean? How does Clause 16 then go beyond the Millard Tucker Report?

The Solicitor-General: I am unable to follow the hon. Member's question as referring to the line which he mentions.

Mr. Jenkins: I beg the hon. and learned Member's pardon. I was referring to page 18, line 37.

The Solicitor-General: I will try to deal with that point on the Motion, "That the Clause stand part of the Bill," when I have had an opportunity of looking at the line to which the hon. Member refers.

Mr. H. Fraser: In view of the careful reply which has been given by the Solicitor-General, although he has been


confused by some of the talk from the other side of the Committee—I understand line 37 quite clearly—and in the hope that what has been said will be carefully considered between now and the Report stage, and line 37 fully understood, I beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Sir Harold Roper: I beg to move, in page 19, line 11, after "thereto," to insert:
but not the working of such deposits.
I move the Amendment in the belief that the addition of these words is necessary to give effect to the Government's intention in the Clause. I need detain the Committee for a few moments only in explaining why I believe the Amendment to be necessary. As we have heard in the discussion on the previous Amendment, Clause 16 deals with abortive expenditure on prospecting for oils and minerals, and is in accordance with the recommendations of the Millard Tucker Report.
10.0 p.m.
The position is that the discovery of a new deposit has the effect of creating a new capital asset, and therefore it becomes, for Income Tax purposes, a capital expense. Similarly, in the normal way the search for a new deposit is normally accounted as a capital expense. But the Millard Tucker Report took the line that it is part of the business of the normal mining company or producing oil company constantly to search for and discover new deposits in order that it may keep its business going; that if there is to be any continuity in its business it must be searching constantly for these new deposits.
For such reasons, it was provided in the Income Tax Act, 1945, that abortive expenditure, expenditure on prospecting which proved to be unsuccessful in discovering new deposits, should be counted as a revenue expense, if it was expenditure in prospecting in the same mineral field. Clause 16 in the present Bill extends that to the discovery and the search for new deposits from any source. Where such abortive expenditure is incurred, the Clause lays down that it will be deductable for Income Tax purposes in one block, at the time when the search is abandoned.
The subsection to which my Amendment relates excludes from the operation of the Clause:
expenditure incurred in the course of a trade which consists of or includes the searching for, discovering and testing of mineral deposits and winning access thereto.
But practically all mining companies and producing oil companies include in their trade the searching for oil. Therefore, it appears to me that this subsection, as drafted, excludes from the operation of this Clause practically all those companies to whom, as I interpret it, the Clause is intended to apply.
My Amendment is drafted on the assumption that the intention of the Government is to exclude, not the ordinary working mining or oil companies, but perhaps companies which may be purely exploring companies, which, having discovered deposits, pass them on to be worked by another company. My Amendment is drafted to apply what I believe to be the intention of the Government.

The Solicitor-General: I think that in answering the Amendment of my hon. Friend the Member for Cornwall, North (Sir H. Roper), I can deal with the point raised by the hon. Member for Gloucestershire, South (Mr. Crosland). I think I shall have to deal with that point to clarify the position under this Clause and make clear the distinction which exists between subsection (1) and subsection (2, b). The Committee will see under subsection (1) that the person has to be carrying on a trade
which consists of or includes the working of any mine, oil well or other source of mineral deposits.…
That is the first condition which has to be satisfied under that subsection, which goes on to deal with expense in exploratory work by a company of that character.
Subsection (2, b) applies to a company or person carrying on the trade of exploration, and the purpose of the subsection is to ensure that in the case of such a company there is not a double deduction of the expense incurred. Without Clause 16 at all, a company whose trade is that of exploring would be able to deduct as a trade expense the expenses connected with that work. Subsection (2, b) is really only necessary to make it clear that there cannot be two deductions


of the same expenses incurred. I hope that I have made that position clear, and in the light of that explanation, which I trust will satisfy the hon. Member for Gloucestershire, South, I hope that this Amendment will be withdrawn.

Mr. Mitchison: I am not quite clear about this matter. In both cases, in the definition on page 18, line 35, and also in the definition on page 19, line 8 onwards, we get the words, "or includes." I should like to ask the Solicitor-General what happens in the case of a trade which includes both these two subject matters. Obviously, it is not merely a question of trades which consist, on the one hand, of working and, on the other hand, of exploring. It is a question of trades which may include something else. Suppose there is a trade which includes both the exploration and the working. In that case, is the Solicitor-General fully satisfied that the Clause will prevent the double claim to which he rightly and reasonably objected?

Mr. Crosland: I must apologise to the Solicitor-General first for unwittingly misleading him earlier with a slight confusion about the correct line, and secondly, for not entirely following his explanation just now. I follow his explanation about subsection (2, b)—that is to say, about companies whose work consists in searching for, discovering and testing. I am not entirely clear about the position of companies which carry on the trade which consists of working as opposed to searching for and testing.
It is clear that this Clause is derived from paragraph 240 of the Millard Tucker Report. That Report recommends that abortive exploration should be exempt where it is incurred in searching for a mineral which the company is already working; that is to say, that if a copper company finds its exploration for new copper deposits abortive, then to that extent it is allowed relief. The Solicitor-General said that this Clause now goes beyond the Millard Tucker Report. If that is so, I still do not understand the meaning of the words in line 37. I should have thought that those words, read in their context, came to almost exactly the same as the phrase in the Millard Tucker Report:
…minerals which the company is already working.

I do not see, in view of this phrase. how this Clause can be described as going a great deal further than the report. If it does, I should be grateful for an explanation of how it goes further.

Sir H. Roper: I must confess that I have difficulty in accepting or understanding the explanation of the Solicitor-General. It appears to me that this Clause excludes every mining company at present operating in Cornwall. Perhaps my hon. and learned Friend will be good enough to explain to me later why I am wrong. Perhaps he will think it over and mention the matter again on the Report stage. In the meantime, I beg to ask leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Motion made, and Question proposed, "That the Clause stand part of the Bill."

Mr. Roy Jenkins: I think we ought to have a further explanation of the other aspect of this Clause in relation to the Millard Tucker Report. The hon. and learned Gentleman did not explain the matter to the satisfaction of my hon. Friend the Member for Gloucestershire, South (Mr. Crosland), and did not say where the Clause had exceeded the recommendations of that Report. If we cannot be told where the Solicitor-General' thinks this Clause does exceed the Report, may we be told why the Government decided to do this? There must be some reason for making the change, and I think we ought to have it.

The Solicitor-General: I can answer that quite shortly. Most of the other questions which were put to me were on matters which, in my view, bore no relation to the specific questions put.
In answer to both hon. Gentlemen, this Clause is intended to, and I think does, go a stage further than the Millard Tucker Report, as the hon. Member for Stechford (Mr. Jenkins) indicated. The company will be entitled to treat as trading expenses expenditure on seeking some mineral other than that which it was, at the moment, engaged in working. The Millard Tucker Report recommended that expenditure should be allowed for searching for minerals which the company was already working. I can assure the hon. Gentlemen that this Clause is not limited to satisfy that condition. In respect of that expenditure, this Clause is more favourable to the taxpayer.
The hon. Member for Gloucestershire, South, asked what was the precise meaning of the phrase "in connection with that trade" in the complicated subsection (1). As I understand it, it does not mean that a company has to be working the same kind of minerals, but that the trade in that case is a trade—
which consists of or includes the working of any mine, oil well or other source of mineral deposits of a wasting nature.
That is the governing description, and, in my view, it is sufficiently wide to cover the case in which the company goes off and seeks for other minerals. I hope that, with that further explanation, the hon. Gentleman is at last satisfied.

Sir F. Soskice: Is that really a quite satisfactory answer? I hope the Solicitor-General will think further about these words. What do they really say? They deal with the case of a trader who is carrying on the trade of working a particular mine, a particular mine or particular mineral deposit of a wasting nature and in a particular place. Does the phrase envisage that trading in connection with that particular service includes incurring expenditure in exploring entirely different deposits? I find it difficult myself to conceive exactly what the words mean in relation to a situation of that sort?
In what circumstances can we envisage the case of a trader working one particular mine going to a completely different part of the world and beginning to explore a completely different type of mineral deposits in connection with the mine which he is already working? It seems to me to be difficult to conceive of a situation of that sort, and I suggest to the hon. and learned Gentleman that he reconsider these words. It seems to me that they will be extraordinarily difficult to construe in relation to any given circumstances.
It is no good saying that there will be a question of fact whether the expenditure on exploration for a different mineral and in a different part of the world is or is not within the scope of a particular trade. It almost certainly will not be, and in the vast majority of instances one can imagine that it will not be possible to say that a trader has incurred expenditure in a different part of the world and on a different type of mineral in connection with the source which he is already working and which is of a particular kind

and in a particular place. I hope that before we part with this Clause the hon. and learned Gentleman will say that he will think further about those words which, in view of the argument to which we have listened in the course of the discussion on this Clause, I must confess do not seem to be satisfactory, and which are, I am sure, very far from clear.

The Solicitor-General: I would say straight away that the point raised about the meaning of this Clause is purely a drafting point, but, without giving any assurance at all about altering the drafting, I will certainly look at the words again.

10.15 p.m.

Mr. Mitchison: I am certain there are very many occasions on which the Solicitor-General does not wish to be discourteous, but I did ask him a serious question which he has entirely failed to answer. Therefore, I propose to repeat it and to ask him once more if he will be good enough to enlighten me on the point. He has told us that but for the provision of Clause 16 (2, b) we would, in the case of an exploring company, I think he said, get a double claim.
The point I wish to put to him is this. Let us imagine a company which is carrying on a trade properly described as partly exploration and partly mineral working and, therefore, a trade which includes both the matters mentioned in subsection (1) and in subsection (2, b).Is the hon. and learned Gentleman satisfied that the Clause as drafted prevents in that case the double claim which he wished to avoid when replying to one of his hon. Friend's Amendments?
It seems to me that the matter is by no means clear, particularly when one looks at the language used in the Millard Tucker Report, which quite rightly mentions exploration expenditure incurred in searching for a mineral which the company is already working. There can be a case of this kind, but even if I am mistaken in my doubts about the case, I suppose it is at any rate possible that some of the other people who have to read and apply the Clause may also be mistaken. I should have thought it was within the ordinary practice of courtesy in this Committee, as it is certainly within the competence of the hon. and learned Gentleman, to answer a question which he has been asked.

The Solicitor-General: I am sorry if the hon. and learned Gentleman thinks I have been discourteous in any way. I must say that his point did escape my memory when I came to reply, but I certainly had no intention of being discourteous to the hon. and learned Gentleman. I have explained to the best of my ability the object of subsection (2, b). It is to avoid the double claim. But there is a danger that the relationship of subsection (2, b) and subsection (1) may create difficulties.
I have already said that we shall look at the actual drafting of subsection (1), and, of course, we will look at the drafting again in the light of the hon. and learned Gentleman's observations. But I think the object of subsection (2, b) is satisfactorily achieved at the moment, although I will certainly look at the matter again.

Mr. Mitchison: I am much obliged to the hon. and learned Gentleman for his courteous reply.

Sir E. Boyle: I would not trouble the Committee with a further speech, but for the fact that having re-read the Clause and the relevant section of the Millard Tucker Report, I think I can possibly answer the question which has been puzzling hon. Gentlemen opposite on the question of how far and why this Clause goes beyond paragraph 240 of the Millard Tucker Report.
One of the stock objections to this Clause in the past has always been, as the Millard Tucker Report says:
that abortive expenditure on exploration is in substance a loss sustained in an attempt to create a new capital asset.
It was in order to meet this objection that the Millard Tucker Report ended with the recommendation that exploration expenditure should be allowed only
provided that it is incurred in searching for a mineral which the company has already worked.
As I see it, Clause 16 goes beyond the Millard Tucker Report in that it takes no notice of that objection to which I have referred, and is thus a greater stimulus to the creation of a new asset.

Sir H. Roper: In regard to the Solicitor-General's reply to my Amendment, which has failed to receive approval, may I ask him to give a specific assurance that this Clause is

designed to cover abortive expenditure incurred by companies mining for minerals in Cornwall?

The Solicitor-General: The marginal note reads:
Expenditure by mining concerns on abortive exploration.
I think that satisfies my hon. Friend's question.

Clause ordered to stand part of the Bill.

Clause 17.—(EXPENDITURE BY MINING CONCERNS ON MACHINERY AND PLANT USED FOR EXPLORATION.)

Motion made, and Question proposed, "That the Clause stand part of the Bill."

Sir F. Soskice: Is this, presumably, to carry out the further recommendation, in paragraph 244 of the Millard Tucker Report, to include expenditure on machinery incurred before trade starts?

The Solicitor-General: The Millard Tucker Report said in paragraph 244:
… but it may happen that particular items of plant are used exclusively for exploration and that exploration ends before the business begins; in these circumstances the owner of the business will get no allowance. This is clearly a casus omissus and we recommend that where exploration expenditure generally qualifies for allowance, the allowance should extend to exploration plant.
This Clause gives effect to that recommendation and includes the provisions required to deal with certain consequential matters.

Clause ordered to stand part of the Bill.

Clause 18.—(EXPENDITURE BY MINING CONCERNS ON ACQUISITION OF LAND OUTSIDE THE UNITED KINGDOM.)

Motion made, and Question proposed, "That the Clause stand part of the Bill."

Sir F. Soskice: I presume that this Clause deals with a recommendation in the Report. Is that the object?

The Solicitor-General: This, again, is a Clause giving effect to a recommendation by the Millard Tucker Committee in paragraph 239 in respect of allowances for expenditure by mining concerns in the acquisition of land outside the United Kingdom. Land, of course, is not of


itself a wasting asset, but land which has to be given up on the expiry of a foreign concession, however, is a special case. It may happen that the mining concern may be forced, when its concession comes to an end, to surrender without compensation, and the Millard Tucker Committee observe that
In these circumstances the asset which is acquired by the expenditure is of the nature of a wasting asset, and we recommend that writing-off allowances should be given on the same lines as those given under Part III of the Income Tax Act, 1945, for other capital expenditure incurred by mining concerns.
This Clause shortly provides for that.

Clause ordered to stand part of the Bill.

Clause 19.—(CONTRIBUTIONS BY MINING CONCERNS TO PUBLIC SERVICES, ETC., OUTSIDE THE UNITED KINGDOM.)

Motion made, and Question proposed, "That the Clause stand part of the Bill."

Mr. E. Fletcher: This Clause is so important that even at this late hour we ought to devote a moment or two to it before we pass on. In terms, it follows precisely the recommendations in paragraph 241 of the Millard Tucker Report, but I think it is a great pity that the Chancellor of the Exchequer could not find it possible to go further than the precise terms of the recommendations of that report, because it is obvious from what the Committee said that they would liked to have gone further.
This Clause is an attempt to deal with a real problem, namely the problem which confronts mining concerns abroad in making contributions to the public services of the countries in which their activities are engaged. I think it is relevant to remind the Committee of what the Millard Tucker Committee said about this. They said:
It was represented to us that companies operating abroad in undeveloped countries are often called upon to make large contributions towards the establishment or development of local public services, and that tax relief ought to be given in respect of such expenditure. We have much sympathy with this view;
I am sure the Committee has great sympathy with that view as well, and I hope the Chancellor will have. They go on to say:
… there is, however, the danger that any general provision drafted to give relief would be far wider than was intended and might apply where the contribution was made from munificence rather than for business reasons.

But is "munificence" the right word? Is that an appropriate word to use in the case of trading companies, mining companies, oil companies and others operating in backward undeveloped countries, who, as hon. Members know, from time to time are not merely invited but are expected and required to make contributions of all kinds to the public services in those backward undeveloped countries? It might be a contribution towards a water supply or drainage. It might be the provision of hospital or educational facilities; frequently it is a contribution for relief of famine and so forth. Those contributions are not made for reasons of munificence.
Hon. Members opposite have referred to the loss of Abadan. Have we not something to learn from recent experiences in Abadan about the duties of companies which are operating in backward undeveloped places? Ought not the Chancellor to see that it is made possible for companies to have appropriate taxation relief where contributions of that kind are made?
This Clause as it stands is limited to contributions to works and services
or facilities wholly or mainly for the welfare of persons employed"—
with the company—
or their dependants;".
Those words are very limiting and, I should have thought, very unsatisfactory. Although no Amendment is down on the Order Paper—there may be one on the Report stage—I earnestly hope that in view of the wide social implications of the subject the Chancellor will consider this matter between this stage and a later stage of the Bill.

The Solicitor-General: The objects of the Clause are again in line with the recommendations of the Millard Tucker Committee, but in two respects there has been a departure from those recommendations and it might be convenient to mention those briefly. The Tucker Committee recommended that in relation to expenditure of this character, there should be relief by way of widening Section 66 (3) of the 1945 Act, whereas the Bill provides that allowances on the basis of a 10-year spread will be allowed.
That will be much simpler and more favourable to the taxpayer in that 10 per cent. can be written off each year instead


of normally 2 per cent. on which the allowances are made in respect of industrial buildings. That is one respect in which the Clause is more favourable than the Millard Tucker Report. The other respect in which it is more favourable is that it extends to contributions made in respect of houses built by other persons for persons employed at or in connection with the working. In those respects it goes beyond the Millard Tucker Report and in other respects it follows the recommendations.

10.30 p.m.

Mr. E. Fletcher: Will the hon. and learned Gentleman agree that there is nothing in the Report which proposes to limit contributions to service
wholly or mainly to buildings occupied or to be occupied by persons so employed;"?

Clause ordered to stand part of the Bill.

Clause 20 ordered to stand part of the Bill.

Clause 21.—(AMENDMENTS AS TO ALLOWANCES, ETC., IN RESPECT OF MACHINERY OR PLANT AND PATENT RIGHTS.)

Motion made, and Question proposed, "That the Clause stand part of the Bill."

Mr. Austen Albu: It would no doubt be inappropriate to discuss the Clause at the moment because the whole of the Clause is contained in a Schedule which occupies seven pages. I should like to ask the Solicitor-General to confirm what appears from a reading of the Schedule to be the case, that this is simply a Clause to close up a loophole and prevent certain possibilities of tax evasion in these extremely complicated matters of additional allowances, depreciation allowance and subsequent balancing charges. No doubt we shall be debating the Schedule later, but I ask now whether it would be possible to simplify that extremely complicated Schedule. Perhaps the right hon. and learned Gentleman can also confirm what the Clause is intended to do.

The Solicitor-General: The hon. Member's impression of what the Clause is intended to do is quite correct; this is a loophole-stopping Clause on which the

Schedule depends. As the hon. Member knows, when one wants to make alterations in the tax law to stop loopholes the alterations are likely to be complicated.

Mr. F. Harris: There is an important point upon which the Minister may be able to give an undertaking, and which has been exercising the consideration of members of our local chamber of commerce. As we understand it, expenditure on the right to acquire future patent rights will be regarded as an expenditure on the purchase of patent rights as from the commencement of the Finance Act, 1952. The Board of Inland Revenue, according to our information in Croydon, has, prior to the Clause being put down, consistently argued that the acquisition of future patent rights was a capital expenditure not liable for taxation purposes and more often than not because the payment had been made after a provisional application for a patent had been made but before the final specification had been purchased.
In view of the attitude of the Board in this matter, I wonder if the Chancellor might be prepared to give an undertaking that he will instruct the Board to interpret the old provisions of the Income Tax Act, 1945, up to the date of the commencement of the Finance Act, 1952, on the basis indicated as now being acceptable by the Board within the provisions of paragraph 16 of the Sixth Schedule.

The Solicitor-General: Under the existing law a payment in respect of a sum laid out to purchase patent rights is charged to tax in the hands of the recipient. There is no similar provision in regard to a capital payment in respect of an application for a patent. This Clause seeks to remedy that difficulty. The Schedule is not being applied with retrospective effect and the main modifications will come into effect after the commencement of the Act, that is to say after the date when the Bill is passed.

Mr. Glenvil Hall: Will the right hon. and learned Gentleman say what would comprise an "event" coming into operation after the commencement of the Act? Would it mean that the patent would have to be applied for when a certain stage had been reached? Or must it have got much further than that—must the patent actually have been applied for by the time the Act comes into operation?


I must add, finally, that I am surprised at an hon. Gentleman opposite suggesting we should here legislate retrospectively.

The Solicitor-General: I must resist the temptation to try and explain the precise legal definition of the word "event" It is beyond my capacity.

Clause ordered to stand part of the Bill.

Clause 22.—(TIED PREMISES.)

Motion made, and Question proposed, "That the Clause stand part of the Bill."

Mr. Geoffrey Bing: It would be very unfair on the party opposite if the Committee were to pass from this Clause without some discussion. After all, it has always been the policy of hon. Gentlemen opposite to see that about 10 per cent. of their Members are directors of brewery companies, and as this Clause is described by the "Brewery Journal" as striking a hard blow at the brewery companies, there ought to be at least an explanation by the Chancellor of the Exchequer of why he should have seen fit to strike this blow at people who, as we all know, are principal contributors to Conservative Party funds.
We all know that the Chancellor very carefully worked the Excess Profits Levy so that the one class of shares that rose on the market very appreciably were the brewery shares, and it is therefore unfortunate that, under his eagle eye, this Clause should have been slipped through. It results from a long contest between the Income Tax authorities and the brewery companies. Oddly enough, it always seems to have concerned Tamplin's brewery. So far as I can recall, in 1915 they had the worst of one fall with somebody called Webb; then in 1951, they had the worst of a fall with somebody called Nash.
I am glad to see that the Leader of the House has come into the Chamber. He will remember that the last time that he and I were engaged in any controversy was on the Army Act, and he said that if only I had used a small "c" in my Amendment everything would have been all right. Unfortunately there was a big "C," and therefore the right hon. Gentleman could not accept it. So far as this Amendment is concerned the Chancellor of the Exchequer should realise that if

only he had put a big "T," then this Amendment would have been quite clear. But whenever he speaks of the relevant trade with only a small "t," the statement is not understandable by the public concerned.

Mr. Arthur Colegate: What Amendment?

Mr. Bing: The hon. Gentleman is perfectly right in interrupting. He takes the point of view, as the representative of Burton, that the law as it relates to breweries is fixed and that there should never be any change in it. When I referred to an Amendment I referred to a change in the law which the Chancellor, very foolishly, in view of the hon. Gentleman's opposition, has been so unwise as to propose. I am referring to Clause 22.

Mr. Colegate: I am not a director of a brewery company. Has the hon. and learned Gentleman the right to make these allegations of motive?

Mr. Bing: I am sorry that that is not so. The Conservative Association in Burton ought to be reproved for slipping up and departing from a tradition they have maintained for the last 100 years. There really has been a most deplorable slip from Conservative principles in Burton and, in those circumstances, the hon. Member's lack of knowledge of the brewery trade is perfectly understandable.
I will return to the argument I was making to the Committee in regard to this Clause. What I am really complaining about is the somewhat mealymouthed approach of the Chancellor. Why should not he have said that this Clause refers after all to the "Trade" with a capital "T," and that this is an attempt to get a bit back from the brewery companies for which the Chancellor is giving them a little later on under E.P.T.?
We should like to know one or two figures so that we may compare what we get back and what we are giving them. Has the Chancellor any comparative figures? Can he say how much better or worse off the companies will be when the Finance Bill as a whole is passed?
I am sure that those of his hon. Friends who, unlike the hon. Member for Burton, are directors of brewery companies, and, unlike the hon. Member for Burton, have an interest in breweries, and, unlike the


hon. Member for Burton, are interested in the profits made by breweries, will be able to express themselves on this matter, and say whether in fact the brewery companies, who have described this as a hard blow, are justified in that description. Or whether it is one of the miserable party points which are made from time to time by vested interests who, like the hauliers, think that because they have subscribed to Conservative Party funds they ought to have a say in the legislation of the country.
We, of course, realise that the business of this Committee cannot be conducted in that way, but we think that the Chancellor ought to give some figures to set out the position. As I understand it—and I do not think there is any harm in using terms well known to those who, unlike the hon. Member for Burton, are interested in the "trade"—what the Chancellor is saying is that no longer shall Income Tax authorities pay any attention to the "dry rent"; that they shall look at what is elegantly termed, and which phrase I am sure the hon. Member for Burton would not appreciate, the "wet rent."
What is being asked for is that taxation be assessed on the wet rent. If that is so, how are we to assess the wet rent? Let us look at the Clause in some detail and try to discover from the Chancellor what is meant. We may start by saying that this Clause refers to tied premises. What are the tied premises, other than tied brewery premises, to which it refers? What other trades are affected, if any other trades are affected? It seems wrong to put in general terms a matter which refers to one particular trade.
If it refers only to the brewery trade, or mainly to that trade, how are we to assess this wet rent? How are we to assess the value of licensed premises? The trouble with regard to such premises —and this will lead to a long discussion when we come to the question of licences in the New Towns Bill, a matter which seems somehow to have been dropped from the programme at the moment—is that this is a monopoly created by the State, which is now being exploited by the private individual.
The State, for reasons of sobriety, said there was to be only a certain number of public houses, and this has been ex-

ploited by the brewery companies to control those outlets. What we have to consider is how valuable are those outlets. No doubt the Chancellor will give some indication about how it is proposed to assess the value of those outlets. How are we to find out what is the true wet rent of the premises?
Can the Chancellor tell us—because we understand that these discussions go on—whether there has been any consultation with the brewers concerned, either before the Clause was produced or afterwards, and what are the views of the brewery companies with regard to it? I am quite sure that several of his hon. Friends, who were elected through the assistance of the brewery companies, will seek to use this opportunity to divide the Committee in order to put forward the views of the breweries concerned. Therefore, before they take action of that sort we ought to hear whether this matter has been discussed with the brewers' society and that the brewers have, or have not, expressed their approval of this Clause. If they have then we know where we are, and we shall know that the remarks in the brewers' trade journal are the mouthings of Conservative journalists.

10.45 p.m.

The Solicitor-General: I do not think that any Member was surprised in the least to find that the hon. and learned Member for Hornchurch (Mr. Bing) was unable to resist the temptation to make a speech on a Clause entitled "Tied premises." But, having said that, I must also add that I was unable to discover whether he was in favour of the proposal in this Clause, or whether he was against it. He certainly gave himself a great deal of pleasure by what he said; it might not have been confined to him alone, but he appeared to enjoy himself more than did anyone else.
I am surprised that he should have sought to accuse my right hon. Friend of being friendly to the brewers when what this Clause does is obviously to correct an anomaly which has gone on for a very long time and which the last Government did nothing to correct. Indeed, this anomaly has gone on since 1914; it has not been corrected by Governments since that year, and is now being corrected by a Government accused of undue friendliness towards the brewers.

Mr. Bing: I thank the hon. and learned Gentleman for giving way, but I must ask him to say which Governments have been in power between 1914 and 1945.

The Solicitor-General: The hon. and learned Member knows as well as I do what the answer is, and it shows what influence he had on the last Government, because this anomaly was not then corrected.
To return to the point—and I am sure the hon. and learned Gentleman will support our proposal—the position is that, ever since 1914 the difference between the annual value of the licensed premises and the "tied" rent has been allowed—and allowed legally—as a reduction from the profits of the brewery. The hon. and learned Gentleman will know of the Usher's Wiltshire Brewery case. I need not go into the basis behind that decision; it is a decision which has been somewhat expanded in a recent Tamplin case, and H.M. Government and the Millard Tucker Committee, take the view that this anomaly should be amended.
The effect of the Clause will be to ensure that the annual value will be treated as the rent of the tied house, even although the "tied" rent be less than the annual value. That is to say, that will be the position where the brewer is the owner of the premises. If the brewer is himself a lessee of the premises and is, therefore, making a payment in rent for them, so that a deduction is made from his profits, this complicated Clause comes into effect. I agree it is complicated, but its effect is to preclude any possibility of the brewer paying tax on less than his true profits.
I was asked a question in the course of the speech of the hon. and learned Gentleman about what other trades are affected by this Clause. Of course, he knows that it is intended primarily to apply to the brewers. It is the brewers who "tie" premises, and he wants to put a stop to the practice; but, despite his objections to it, it is not beyond the bounds of possibility that other trades may take tied premises. In the event of that occurring, they will come within the provisions of this particular Clause. I hope I have made the purpose of this Clause clear, and that I have dealt with the question put by the hon. and learned Gentleman.

Mr. Christopher Hollis: May I clear up one doubt I have in my mind? The hon. and learned Member for Horn-church (Mr. Bing) commented on the conclusion of some of his hon. Friends that the brewers are the principal subscribers to Conservative Party funds, while many of his hon. Friends have already on the Order Paper a Motion objecting to the Government's transport proposals on the grounds that the road hauliers are the principal subscribers to Conservative Party Funds. Which is it?

Mr. Bing: We should not leave this Clause with so many matters unresolved. I am sorry there is confusion among my hon. Friends on this side as to who are the principal subscribers to Conservative Party funds, but it would have been dispelled if the party opposite had submitted themselves to the judgment of the House when, in the last Parliament, we passed a Motion asking them to publish their accounts. They have not seen fit to do so, and therefore it is a little hard to blame us for the confusion.

The Chairman: This discussion is going beyond Clause 22.

Mr. Bing: I appreciate that, Sir Charles, but I felt it my duty to answer the hon. Member for Devizes (Mr. Hollis).

Mr. Hollis: The hon. and learned Member is not at all confused. He made a definite statement that the brewers were the principal subscribers. If, as he says, the accounts were not published, how he knows that I do not know.

The Chairman: Order. We cannot argue that point on this Clause.

Mr. Bing: I do not want to say anything out of order. If I may, I will deal with the points that are raised. A number of tied premises are quite different from these tied premises which we have been discussing, and we ought to consider them. We ought to hear from the Chancellor what he is going to do about cinemas. For example, the Rank Organisation has a great many cinemas which are tied premises, which can show only those films sent to them by the distributing organisation. How are they to be taxed?
What about garages? There are a great many which are tied in the sense that they are owned by the same person


and then subjected to a rule that they must sell only certain petrol. Are we to have an undertaking that garages are to be included?
Thirdly, the learned Solicitor-General did not deal with what I think is the very important point as to whether there was any consultation with the Brewers' Society on this matter. Fourthly, there is the point, which I hope will be dealt with, as to whether, when the hon. and learned Gentleman talks of the annual value, he means the annual value which those premises would bear if they were not licensed. The difference is in regard to the rent, which is so low—lower than the rent which would be paid if the premises were let on the open market without a licence. The annual value of licensed premises is the annual value which they would bear if unlicensed.
When we start on such a valuable reform as this, why should we not go on and carry it through, and ensure that the amount deducted is the amount which the premises would pay if let unlicensed? Can we have from the Solicitor-General a statement why he commenced this task, after reproving the Labour Government, the Conservative Government, the Coalition Government and everybody else for not having dealt with it? Will he not tell us why the charge does not extend to the rent paid for other premises which are licensed?
I should like an answer to these four questions. As the Solicitor-General found it difficult to carry them in his mind, and I did not get an answer to them before, I will repeat them. First, is it proposed to apply this provision to cinemas; second, is it proposed to apply it to garages; third, has there been consultation with the brewers; and, fourth, what is it proposed to do with regard to the valuation of premises licensed to a brewer when the annual value of the premises has been calculated on the value of the premises unlicensed?

Mr. Glenvil Hall: Are we not to have a reply? We are not trying to delay the Committee unduly. My hon. and learned Friend has put points which ought to be answered. If the Solicitor-General cannot answer them, perhaps the Chancellor of the Exchequer will do so. I think it is unfair to the Committee that no reply should be given to questions

put in all seriousness by my hon. and learned Friend.

The Solicitor-General: I find it difficult to accept the statement that these questions were put seriously. It is also difficult to accept the view that the hon. and learned Gentleman has read the Clause. If he had, he would see that it is general in application, and that if the circumstances of the letting of a cinema, or garage, are such as to bring it within the Clause, then the Clause will apply in that instance. He tried to suggest that the brewers were getting away with something because the standard of comparison was not the full letting value of the premises. I can assure him that he is wrong. In future that will be the standard taken.

Clause ordered to stand part of the Bill.

Clause 23.—(REMOVAL OF LIMIT OF TIME FOR CARRYING FORWARD OF LOSSES AND MANAGEMENT EXPENSES.)

Motion made, and Question proposed," That the Clause stand part of the Bill."

Mr. Houghton: Some of us on these benches have doubts about a proposal in Clause 23, which apparently deals with one—but only one—of the recommendations of the Millard Tucker Committee with regard to relief for business losses. There are three kinds of relief for business losses. One is in the case of business losses which may be set off against non-business income in the same year of assessment. An example is a landowner carrying on some farming operation who makes a loss on his farm and who can claim relief for those losses by setting them off against the Income Tax assessment on his rents for the same year of assessment.
Another kind of business loss is that incurred by a company which is entitled under the existing law to set off those losses against future profits within a limit of six years. Thirdly, there is the kind of business loss which a company may set off against profits made by another business owned by the same company.
Clause 23, so far as I understand it, relates only to the time limitation at present imposed on the setting off of losses against future profits. The Millard


Tucker Committee, in paragraph 79 of its report said:
We have come to the conclusion that there is no sufficient reason for restricting the period within which business losses can be carried forward, and we accordingly recommend that the owner of a business should be allowed to carry forward business losses and set them against subsequent profits from the business without time limit.
11.0 p.m.
I have not been able to trace the origin of the present six-year limitation upon the set-off of losses against future profits, but I do recall that there has been some magic about a six-year period in Income Tax law both as regards the setting off losses against future profits and also as regards the right of a taxpayer to claim repayment for some relief to which he may have been entitled in previous years.
But there is one doubt about this proposal, which is whether it may be used for a company manipulation in order to avoid taxation, not only Income Tax, but Profits Tax as well. For example, it is possible for a company making a profit to acquire another company which has an accumulation of losses. It can then deflect trade from the company making a profit to the one making a loss so that the profits are reduced in one company in order that profits may be set off against losses in the other company.
Similarly, it is possible for a company to acquire another company which is making a loss and manipulate the trade as between the concerns in order to get the best advantage from the set-off of losses against future profits. The question I am asking the Chancellor is whether he is satisfied that these abuses, which must be known to him, are either not sufficiently widespread or serious enough to merit the retention of the existing time limitation or whether he has other steps in mind to deal with them.
It is noticeable that the right hon. Gentleman has not heeded any of the other recommendations made by the Millard Tucker Committee in this group of paragraphs in the Report dealing with losses. The right hon. Gentleman has not, for instance, taken up the proposal of the Millard Tucker Committee to allow the owner of a business which has made a loss in the final year to set off that loss against previous profits for the three preceding years.
Nor has he adopted the recommendation of the Committee that a business loss might be set off against non-business income for the following year of assessment instead of as at present against the current year of assessment. The right hon. Gentleman must have had some reason for selecting from among the several recommendations made by the Millard Tucker Committee this one for incorporation in this year's Finance Bill.
I should like to have a few words of explanation as to why the Chancellor has selected this recommendation, to know what particular merit he feels it has to justify inclusion in a Bill already full of other important matters, and to ask whether he can give an assurance that abuses of the set-off of losses against future profits are being carefully watched in this connection.

Mr. Maudling: The hon. Member for Sowerby (Mr. Houghton) has correctly interpreted the purpose of this Clause, which is to carry out one of the recommendation of the Millard Tucker Committee. At present a trader who suffers a loss in any particular year can set that off against income from other sources. If he does not wish to do that he can carry it forward for set off against subsequent profits from the same business for a maximum period of six years.
It was represented by the Millard Tucker Committee that this was a quite arbitrary limit for which there was no justification. I rather gathered that the hon. Gentleman agreed that the six-year period had no real justification.

Mr. Houghton: I said no sufficient reason.

Mr. Maudling: I will come to that in a moment.
My right hon. Friend the Chancellor therefore considered that this was an important matter on which the Millard Tucker Committee had pronounced quite definitely, and which he thought was suitable for inclusion in this year's Finance Bill.
The point the hon. Gentleman mentioned about the possibility of abuse is a significant one. I can assure him it was in the mind of the Millard Tucker Committee, who took full account, when they made their recommendations, of the possibility of abuse arising in the way he


suggests. It is arguable to what extent, in certain circumstances, tax avoidance—not evasion—of this kind might give arise to abuse.
Even in cases where there are abuses, it is extremely difficult in practice to distinguish between cases where the acquisition of a company is based on sound business reasons and where it is not based, in the ultimate event, on sound business reasons. The fact is that it would only be in rare circumstances that any abuse could occur.
The successors to the previous company would have to carry on precisely the same business and there would have to be no period of cessation in between. But, in this, the Inland Revenue authorities, who keep an eagle eye on the matter, are satisfied that the possibility of tax avoidance in these directions are at present very small indeed. I can give the assurance, that should that problem arise in the future to a serious extent, the Chancellor will give it very close and necessary attention.

Mr. Mulley: The Parliamentary Secretary to the Ministry of Civil Aviation has given us another carefully considered reply, but I do not think it is good enough to explain why, in view of the point put by my hon. Friend, this method of closing the loophole of tax avoidance has been selected. It would be different if this proposal had been brought forward along with the other recommendations of the Millard Tucker Committee. Why is this particular one chosen this year?
I do not claim to have any special knowledge in this field but I was surprised to read in a financial paper a little while ago that one can get a substantial price for a company carrying substantial losses. Surprisingly, apparently, contrary to what one would have expected, the price is larger if the losses on the books are larger. It seems that the good will built up with the Inland Revenue authorities is a more valuable asset in some circumstances than good will of the normal commercial character.
Looking at the matter as a layman, without any special tax or business knowledge, it seems that, if one cannot make a profit in a firm over six years, we on this side of the Committee, when we take

over, will have a thin time because if the present Government run their full time, they will not be able to balance the books of the country. We have had no explanation why this change has been brought forward now. We should not let this Clause pass tonight unless we get a firm assurance that the other much more substantial recommendations of the Millard Tucker Committee are to be brought forward next year, if this Government are still in power.

Mr. Gerald Nabarro: I feel the use of the word "abuse" by the Parliamentary Secretary to the Ministry of Civil Aviation and reference to "tax avoidance" by the hon. Member for Sheffield, Park (Mr. Mulley) might give a somewhat misleading impression. Surely, it is true to say that the higher the average industrial rate of tax becomes—and now it is a three-tier system comprising Income Tax, Profits Tax, and Excess Profits Levy, which results, taking an average, in all the companies paying taxation, at about 70 per cent. of gross profits earned—a greater selling value is given to a company which shows on the balance sheet a substantial loss carried forward.
It is not at all difficult to envisage a situation in which a company that has been trading for a number of years finds itself in the position of having assets that might perhaps be worth only £10,000 but of having carried forward on its balance sheet a loss amounting to £100,000. The value of that company in the open market, to any other company buying it to make the first company a wholly-owned subsidiary—the value of the sale—is, of course, related to the value of the loss forward of the company that is being sold.
In view of the average rate of total taxation at 70 per cent. there is nothing at all immoral or indecent in buying a company with a substantial loss forward. In fact, in many circumstances. it is a sound business deal. Therefore. I deprecate the use of the expression "abuse" on this side of the Committee or "tax avoidance" on the other side, because bringing a loss forward is a perfectly legal contrivance of which I am sure the hon. Member for Sowerby (Mr. Houghton) would readily approve

Mr. McKay: I think it is a peculiar practice to allow these privileges to businesses which they have not had in the past. I understand that in the past losses were permitted to be carried forward for six years against profits. Now that time limit is to be removed. We should compare the position of companies with that of the individual. The individual is taxed at the point where, in the opinion of the Exchequer, he has reached a sufficiently high standard of income to enable him to live in reasonable circumstances. The same, presumably, applies to companies which are taxed upon profits they make over and above their needs. Those profits, in a sense, are their liabilities.
We are dealing here with firms which may get into a bad condition of health, as it were, losing money year after year. The individual may be relieved of tax if through sickness he cannot meet his liability in a particular year, but if he is ill for some years can he, when he regains his health, offset his past losses against his future income? Of course not. An individual who has been ill is not allowed to count any losses against future income. Yet an industrial firm has been allowed a period of six years, and it is now proposed to extend the period. I do not think that is fair.

Sir Arnold Gridley: I only want to make one point which may appeal to all hon. Gentlemen. The Committee will appreciate that there are many companies today—perhaps more than is generally appreciated—who are incurring losses because of the continuance of high rates of Purchase Tax. As long as Purchase Tax continues at the present high rates such companies will continue to make losses and, therefore, the period of six years is not sufficient if Purchase Tax continues, and none of us can see the early abandonment of that tax. That is a perfectly good reason and justification of the extended period.

Mr. Glenvil Hall: I think my hon. Friends on this side of the Committee will not seek to take this matter to a Division, but that does not mean to say we are very happy about this proposal. We are rather suspicious to begin with that this proposal—if it can be called a proposal, because it was not in fact a recommendation of Millard Tucker

Committee—has been picked out for inclusion in the Finance Bill.
The only reason that the Parliamentary Secretary to the Ministry of Civil Aviation gave was that six years was an arbitrary period. Well, all dates are arbitrary. If I have a certain sum of money coming to me in March it falls into one year, and if it comes at the end of April it falls into another. It would make all the difference—and indeed often it does—to what Income Tax I pay. We do not think it a valid reason for putting this provision in the Finance Bill this year that the Millard Tucker Committee could find no real reason for the six years, the period embodied up to now in Finance Acts. Therefore, we shall watch this matter very closely during the coming year, and we rely on the undertaking by the Parliamentary Secretary that the Government will watch it, and that if there is tax evasion they will come again to the Committee and put this matter right.

Clause ordered to stand part of the Bill.

Clause 24.—(RENTS FOR EASEMENTS FOR WIRES, ETC., OF RADIO RELAY SERVICES.)

Motion made, and Question proposed, "That the Clause stand part of the Bill."

Mr. N. Macpherson: While I do not quarrel with the general purpose of this Clause, which is intended to correct an anomaly that has arisen, there is one small point I should like to bring to the attention of the Chancellor relating to the definition of radio relay services. It seems to me just as well, if we are putting a definition in the Finance Bill, that we should make it in such a form as will last for some time. It is no criticism of the Parliamentary draftsmen or anyone else that this definition no longer happens to be up to date or in accordance with the policy of the Government.
Since the Clause was drafted, the Government's White Paper on broadcasting has appeared and it says that in future the broadcasting monopoly, which exists in fact if not in law, will no longer continue to operate. It seems, therefore, that the definition should be brought into line. It may be done by the addition of two words where it says:


'radio relay service' means the retransmission by wire to their customers of broadcast programmes (which may or may not be television programmes) which the persons carrying on the service receive either by wire or by wireless from the British Broadcasting Corporation or from the persons outside the United Kingdom who broadcast the programmes —.
All we need to put in is: "or from persons inside or" before
outside the United Kingdom.
I trust that the Chancellor will make that amendment during the next stage of the Bill in order to bring the Clause into line with the intentions of Her Majesty's Government.

Clause ordered to stand part of the Bill.

Clause 25.—(RESERVES OF MARKETING BOARDS.)

Motion made, and Question proposed, "That the Clause stand part of the Bill."

Mr. Frederick Willey: I do not think we should part with this Clause without some explanation from the hon. Gentleman on the Front Bench who has studied it and prepared a short, concise reply. As far as I gather, this Clause applies only to the Wool Marketing Board. Perhaps the Financial Secretary to the Treasure could explain the purpose of the Clause.

Mr. Boyd-Carpenter: The hon. Member is quite correct. At present the Clause applies only to the Wool Marketing Board, but it is so framed as to cover boards of the same limited and strictly controlled character which are subsequently set up. It operates to ensure that the moneys going into the Reserve Fund of the Board are not subject to tax at that stage in the hands of the Board, but do become subject to tax when they issue to the producers.

Clause ordered to stand part of the Bill.

Clause 26.—(PRIORITY IN BANKRUPTCY, WINDING UP, ETC., OF EMPLOYERS' LIABILITY FOR TAX DEDUCTED.)

Motion made, and Question proposed, "That the Clause stand part of the Bill."

Mr. Houghton: This Clause will be welcomed on both sides of the Committee. It remedies a weakness in the present powers of the Inland Revenue in securing money which is held by a bankrupt and which is deducted as pay as you earn and does not rank as a preferential debt under bankruptcy proceedings. I think the Committee would like to be assured that this weakness has not had serious consequences.
All hon. Members will agree that employers who are deducting tax from the pay packets of workers are trustees for the State. They are in a special position of responsibility for the custody and safe handing over of large sums of money. I know there is a strong temptation, especially in conditions of restricted credit, for employers to use—however temporarily—the money they have deducted from the wages and salaries of their workers. This is cheaper than a bank overdraft and easier to get and the longer they can hold on to it the greater will be the convenience of the use of this money they have deducted as Income Tax from their workers.
The Clause relates to the narrow question, important nevertheless, of being able to rank with other Income Tax this liability which may be equally a preferential debt under the bankruptcy proceedings. I am sure we should be dismayed to hear that the Clause is made necessary by any widespread discovery of default in this matter by those who have gone bankrupt, whether they are alive or dead.

Mr. Boyd-Carpenter: The hon. Member for Sowerby (Mr. Houghton) has correctly interpreted the effect of the Clause and I need only deal with its necessity. The necessity for putting it into the Finance Bill arises in this way: the matter was formerly dealt with under Statutory Instrument 453, 1950, and some doubt arose as to the validity of that Statutory Instrument. Some months ago it was, therefore, withdrawn. This clause puts the law back on the basis on which it was thought to be under that Statutory Instrument, and puts it, of course, on a proper statutory basis.

Clause ordered to stand part of the Bill.

Clause 27.—(SURTAX ASSESSMENTS.)

Motion made, and Question proposed, "That the Clause stand part of the Bill."

Mr. E. Fletcher: Would the Financial Secretary or the Solicitor-General confirm that this Clause operates retrospectively, and that the well-known objections to all retrospective legislation that hon. Gentlemen opposite have so frequently enunciated have no operation in this respect?

The Solicitor-General: This Clause is rendered necessary because one taxpayer has objected to paying on his Surtax assessment on the ground that Surtax assessments are now made at Thames Ditton, whereas the Regulations provide that they be made at London. It would be possible to alter the Regulations, but that would apply only to the future. To collect money due under an assessment made at Thames Ditton it is necessary that this Clause should have retrospective effect.

Mr. Houghton: Is it a fact that certain Surtax payers have been unscrupulous and unpatriotic enough to plead exemption from their Surtax assessments on the ground that they are bad because they have been made at Thames Ditton instead of London?

The Solicitor-General: The hon. Gentleman would be the first person to draw attention to the fact that someone was called on to pay tax on an assessment that was not legal.

Clause ordered to stand part of the Bill.

Clause 28 ordered to stand part of the Bill.

Mr. R. A. Butler: I beg to move: "That the consideration of Part IV be postponed until after the consideration of Part V."
This has been done really for the convenience of hon. Members, and I give what I think is a very good reason. I am putting down tonight—and they will appear on the Order Paper tomorrow morning—certain further Amendments dealing with the Excess Profits Levy. These will deal with the standard years, from which it is now proposed to make a choice.
Quite a number of other Amendments will appear on the Order Paper in the morning. It will be clear when hon. Members read them, that these will lighten the burden of the Levy in hard cases, and it will at the same time—I am now coming to the reason for postponing Part IV, which deals with Profits Tax—be necessary to protect next year's Revenue. One of the Amendments I propose to put on the Order Paper will embody the idea of recouping a substantial part of the reductions made in the Excess Profits Levy by putting up the distributed rate of Profits Tax to 22½ per cent. This will reduce the tax below what it was previously under the late Government, but it will mean that the tax will continue to fall on the proportion of profits distributed in dividends.
I will say only briefly that in my opinion this should be noted by both sides of industry in responding to the appeal I have made, and I speak to the trade unions in particular for restraint in wage demands. I am keeping the non-distributed Profits Tax at the low figure of 2½ per cent. I think it right to mention this, as the Amendments will be on the Order Paper tomorrow so that they can be discussed in due course during this week. It would be unfair to ask the Committee to take the Profits Tax part of the Bill immediately in view of that statement. Therefore, when Members have read these Amendments it will be much better to deal with the Excess Profits Levy and take the Profits Tax afterwards.

Mr. Roy Jenkins: The only difficulty we are in here is that it is not quite clear to me from the Chancellor's statement to what extent these proposed changes in the Profits Tax will recoup the loss that will follow in the yield of the Excess Profits Levy as a result of the Amendments he already has put down and those which he proposes to put down tomorrow. As I understand it, the position under the Budget was that we were to lose £100 million of revenue from the Profits Tax and gain £200 million from the Excess Profits Levy. I imagine, so far as we can follow at this stage the changes which have been announced by the Chancellor, that to take 1950 as one of the standard years will drive a very big hole into the yield of the Excess Profits Levy.
11.30 p.m.
For my own part I would not object, provided the money comes back on the Profits Tax, because most of my hon. Friends take the view that the Profits Tax is in itself a far more desirable form of taxation than the Excess Profits Levy. But before being asked to consider in detail tomorrow exactly how big a hole we are willing to drive into E.P.L. we ought to know exactly the position so far as recouping this revenue on the Profits Tax is concerned.
Is it possible for the Chancellor to tell us, before we accept this Motion, whether his proposal for changing the Profits Tax does amount to getting back from the Profits Tax just as much revenue as he will lose from the Excess Profits Levy both by virtue of the Amendments he tabled, I think, last Friday and the Amendments he is to put down tomorrow?

Mr. Butler: The answer to the hon. Member is that I shall have to explain in a speech of some length on Clause 31 the total effect of the proposal in regard to the Excess Profits Levy and the Profits Tax. The hon. Member would not be right in supposing that the sums exactly balance. But he will have to take into account from the point of view of the Revenue the greater certainty of distributed profits returned to the Revenue as against the lesser certainty of what would be the yield of the Excess Profits Levy. There will be a balance against the Revenue, but not a very large sum, and the general effect will be that the distributed Profits Tax will be less-that is to say 22½ per cent.—than it was before. But it will result in a considerable recoupment of a large part of the concessions made.
There will be no departure from the standard years, but now a choice of two out of those three will be given, except in exceptional cases dealing with the Far East and other considerations. Actually all the detailed Amendments have been put on the Order Paper. These later Amendments are matters of principle which are easy to understand, whether hon. Members agree with them or not. On the merits it would be much fairer if I made a statement tomorrow.

Mr. Jenkins: The only thing hon. Members might like to have from the Chancellor tonight is an assurance that before we come to deal finally with these Amendments to the Excess Profits Levy we will know precisely where we stand—

The Chairman: We cannot be precise tonight. I do not think we can discuss the matter further tonight if we are to discuss it tomorrow. The only thing we can discuss at the moment is the reason why Part IV should be postponed.

Mr. Jenkins: With respect, I think that in considering whether it is proper and wise to postpone Part IV and take Part V first it is extremely important that we should know—when we consider Part V tomorrow, which involves the giving of concessions which will reduce the Revenue—exactly what are the proposals of the Chancellor for providing compensation for that under Part IV. I was asking that the Chancellor should give us, not in great detail, but an assurance that before we deal with the Amendments to Part V tomorrow he will be in a position at some stage to tell us exactly how much revenue he is getting back from the Profits Tax, so that we should know when we continue our consideration of the Bill tomorrow.

Mr. Albu: It seems to be a most extraordinary situation. We have, after all, had the whole of the Budget debate and passed the Ways and Means Resolution. Yet before we can proceed to the raising of this Excess Profits Levy there is a reversal of the whole of the Chancellor's Profits Tax policy in accordance with criticisms made very largely by hon. Members on the other side of the Committee. We have criticised not only the imposition of the Excess Profits Levy, but also the reduction of the Profits Tax. We also criticise the reduction of the Profits Tax before we have this increase, which we are told will be introduced. Surely there will have to be a Ways and Means resolution? Can the tax be raised without that change, for if there is no Ways and Means resolution, it would appear that the point which has been raised by my hon. Friend is a very valid one. It does appear to me that we are going to make important changes in taxation in the middle of a Finance Bill.

Mr. Butler: What I am proposing is to go out of my way to help the Committee. I am told that I could announce these items in the course of the Committee stage in answer to speeches, but I am putting them on the Order Paper ahead of any debate so that right hon. and hon. Members will have the opportunity of considering my proposals for two or three days. The Profits Tax cannot come up until Thursday, and I am giving the opportunity I have just mentioned instead of jumping in during the discussion.
As regards the point made about Ways and Means, I am informed that I could make this Amendment as late as Report stage; but, curiously enough, we do not need the Ways and Means Resolution for this. I could have left this until much later, but I thought it to be in the interests of hon. Members that there should be a "clean" Bill ready to be printed for Report stage so that the House could see the whole picture. I am putting myself out in order to get this at an earlier stage so that the House will know exactly what is the position between Committee stage and Report stage.

Mr. Jay: Could the right hon. Gentleman tell us approximately what are the sums involved in both the increase, and the reduction he proposes in Excess Profits Levy? I would suggest that he is asking the Committee to approve, tomorrow, some sweeping changes in taxation, about which we have heard nothing until tonight, and it would help if we could at least be told that.

Mr. Butler: I am not asking the Committee to agree to sweeping changes in taxation. But this is so complicated, I could not give an answer in 20 minutes. I am, in most cases, trying to meet Amendments put on the Order Paper by hon. Members on both sides about E.P.L. When we come to the Profits Tax, I shall go some way to meet certain Amendments on the Order Paper, and I would rather explain the whole procedure under which this is worked out under Clause 31; the matter will not be debated until Thursday, when the House has had a full explanation.

Consideration of Part IV postponed until after the consideration of Part V.

Mr. Butler: I beg to move, "That the Chairman do report Progress and ask leave to sit again."
I think we have made very good progress, and that we might adjourn our deliberations at this stage. I should like to thank right hon. and hon. Members for their co-operation.

Committee report Progress; to sit again Tomorrow.

WAYS AND MEANS [13th May]

Resolutions reported,

Purchase Tax (intermediate rates)

1. That, in addition to the first, second and third rates of purchase tax, there shall be a first intermediate rate and a second intermediate rate which shall be respectively one-quarter and one-half of the wholesale value of the goods and—

(a) in paragraph (a) of subsection twenty-one of the Finance Act, 1948 (which gives the Treasury power to make orders as to Purchase tax), the reference to the rates of purchase tax provided for by the enactments relating to purchase tax shall include the new rates above referred to and
(b) subject to any order made by the Treasury under the said section twenty-one after the passing of any Act giving effect to this Resolution, in Part I of the Eighth Schedule to the Finance Act, 1948 (as amended), references to the first intermediate rate and to the second intermediate rate shall respectively be substituted for references to the first and second rates in Groups 1 to 7 and in Group 9 (b) (iii);

and effect shall be given to this Resolution as from the fourteenth day of May, nineteen hundred and fifty-two.

Purchase Tax (fur gloves)

2. That, subject to any order made by the Treasury under section twenty-one of the Finance Act, 1948, after the passing of any Act giving effect to this Resolution, gloves made wholly or partly of fur skin (including any skin with fur, hair or wool attached) shall be comprised in paragraph (a) of Group 3 in Part I of the Eighth Schedule to the Finance Act 1948 (as amended) and paragraphs (b) and (c) of that Group shall accordingly be omitted; and effect shall be given to this Resolution as from the fourteenth day of May, nineteen hundred and fifty-two.

Instruction to the Committee on the Finance Bill that they have power to make provision therein pursuant to the said Resolutions.

UNIVERSITY OF LONDON (STATUTES)

11.40 p.m.

Mr. Eric Fletcher: I beg to move,
That an humble Address be presented to Her Majesty, praying Her Majesty to withhold her approval from the Statute made by the Senate of the University of London on 21st March, 1951, amending the Statutes of the University, a copy of which Statute was laid before this House on 29th April.
I hope to speak quite shortly on this Motion, in view of the lateness of the hour, and I should like to preface what I have to say by apologising to the House for the fact that it comes before the House at so late an hour. Unfortunately, under the University of London Act, when statutes of the University are amended by the Senate, there is only a very limited time for praying against the amendments—not the usual 40 days as in the case of a Statutory Instrument, but four weeks, including week-ends. The Prayer comes on tonight because it was agreed on both side of the House that Government and other business was likely to end earlier tonight than on any other day this week.
The University of London is governed by the University of London Act, 1926, which was enacted following a Report generally 'known as the Hilton Young Re- port, and which set up a constitution for the University which, quite shortly, is as follows. It provides for a Court, which has complete financial control, and for a Senate, which has supreme academic authority. Under the Act as it stands, which follows the proposal of the Report to which I have referred, the Senate is at present constituted as follows. There are four ex-officio members, the Chancellor, the Vice-Chancellor, the Chairman of Convocation and the Principal; 17 Faculty members elected by the teachers; 17 Convocation members elected by the graduates; 13 heads of colleges and schools; and four co-opted members.
It will be appreciated that the Commissioners, in framing the constitution of the Senate, tried to ensure a balance between the elected representatives of Convocation, which is a body of some 30,000 graduates, on the one hand, and the heads of colleges and the teachers who, on the other hand, represent the salaried side of the University. The Senate is given power to modify the statutes of the University but the Act provides that no statute shall have operation if within four weeks a Prayer has been passed by either House of Parliament.
I am inviting the House to pray against the proposed new statutes for two reasons. First of all, because there is a very considerable feeling in the University that they are against the public interest, and, secondly, because they shift the balance of representation on the Senate. There was a practically unanimous vote in Convocation against the proposed new statute. The matter has been considered from the legal point of view by a Committee of the Privy Council, which expressed the opinion that, technically, the new statute is not ultra vires.
But there are weighty objections of policy to it. I would remind the House that, when the University of London Bill was considered by the House, in November, 1926, an assurance was given by Lord Eustace Percy, then President of the Board of Education. He said the intention was not to affect or diminish in any way the existing representation of the body of graduates and faculties on the Senate.
The effect of the statute which has recently been passed is to increase by no fewer than five the existing number of heads of colleges and schools who are represented on the Senate, and their total will be increased to 18. The result will be that the graduate representation, which at present is 17 in 55 will be reduced to 17 in 60. It may be said that this change is not significant in itself, but one has to remember that there are many other colleges and schools in the University which are clamouring for representation in the Senate. I think it is reasonable to say that if this change is made without protest, it may be only the forerunner of other changes that will further shift the present balance.
I do not think it will be disputed that the graduates, as represented in Con-


vocation, have always played an important and responsible part in the affairs and management of the University. Those who have been nominated for the Senate by Convocation are drawn from public life generally. They included a great many distinguished names. I need only refer to Sir Alexander Fleming and Sir Robert Watson-Watt. In the control and management of the affairs of the University of London, which expends about £6,500,000 yearly, most of which is provided from public funds, it has always been thought desirable that there should be a substantial element which is democratically elected on a representative basis.
In this connection, may I pray in aid a significant passage from the Public Accounts Committee of this House, which only the other day, in reporting on Treasury grants to universities, stated:
Your Committee would like to see introduced more effective means of securing adequate Parliamentary control over this large expenditure of public money.
One method by which public opinion is represented in the University, side by side with purely academic interests is by these elected representatives of the 30,000 graduates. Therefore, I hope that a democratically elected body like this House will agree that the change proposed in the constitution of the Senate cannot be allowed.
No serious harm will be done if this Prayer is carried. There will still be ample opportunity for the consultation which I think ought to take place between the Senate and Convocation to try to reach agreement or compromise. If there are cogent reasons why the heads of certain colleges should be represented in the Senate it ought not to be difficult to come to some agreement to secure that an adequate balance is still maintained.

Mr. Austen Albu: I beg to second the Motion.
I wish to underline what my hon. Friend the Member for Islington, East (Mr. E. Fletcher), said at the end of his speech. There is no intention of being obstructive, and if these amendments are not made there is no reason why the Senate should not again consult Convocation and try to get some agreed solution. We feel that this particular change is being rather rail-roaded through when agreement could probably have been

obtained. There is no reason why a further scheme of amendment should not be introduced if this one is not allowed.

11.49 p.m.

Mr. Hugh Linstead: There are, I think, several arguments which could be deployed against this Prayer. Without wishing to detain the House for an undue time, I would desire to do that. The proposed amended statutes can be challenged on at least two grounds, namely, that they are ultra vires the power of the University, and on their merits. I was glad to know that the hon. Member for Islington, East (Mr. E. Fletcher), who moved the Prayer, did not contest them on the ground that they were ultra vires, and undoubtedly he did not do that because a committee of the Privy Council which had considered them had come to the conclusion that they were within the powers of the University to make.
I think he would agree that it is primarily on their merits that he has put them to the House. So far as the merits are concerned, it is important to notice that the modern statutes of the University were based upon recommendations made by what is called the Hilton Young Committee, and it is a fair summary of what that Committee proposed to say that they recommended that there should be equal representation of the Faculties and of the graduates, and generous representation of the teaching schools which make up the University.
That principle advocated by the Hilton Young Committee has so far been maintained by representation on the Senate of 17 from Convocation, that is, broadly, the graduates, and 17 representatives of the Faculties, broadly the teachers. In addition, there has up to now been a representation of 13 from the schools. Therefore, we have the principle of equal representation from teachers and graduates and reasonably generous representation from the schools.
The new proposals would result in Convocation being represented by 17, the Faculties by 17 and the schools by 18. I do not think that anybody familiar with the growth of the University of London in recent years would say that that particular composition, 17, 17 and 18, cuts across the Hilton Young Committee's recommendation of generous representation for the schools. I think that the House ought to be reminded


that the change being made was recommended to the University by a Senate Committee some two years ago, and has been very thoroughly thrashed out within the University. As the hon. Member for Islington, East said, it is only Convocation which has opposed the change.
It is interesting that the teachers, the Faculties that is, have raised no objection and that neither have the schools. Convocation, that is the graduates, did object, and they took their objection to the Queen in Council, as they were entitled to do, and by the Queen in Council it was referred to a committee of the Privy Council which after a three-days' hearing, not only of the legal questions involved, but also on merit, decided against Convocation and in favour of the statutes as they were passed by the Senate. I do not think there can be any dispute about that.

Mr. Richard Adams: Would the hon. Gentleman have expected the two bodies mentioned, namely, the representatives of the schools and the representatives of the Faculties, to object to these proposals, seeing that they stood to gain by them?

Mr. Linstead: With respect to the hon. Gentleman, the Faculties are in exactly the same position as Convocation. If there is to be an increase in the representation of the schools then, on a purely numerical basis, the representation of the Faculties, just as that of Convocation, falls, but the Faculties, that is the teachers, have raised no objection to the proposed changes.
As the hon. Member for Islington, East said, Convocation has argued that it is desirable in a body such as the Senate that there should be what Convocation has called "outside informed opinion." Surely the answer to that argument is that outside informed opinion is already on the Senate through the 17 representatives of Convocation and the four co-opted members of the Senate. Unless one regards the Senate as a Parliament, as a place where things are decided by counting heads and not primarily as a body concerned with the government of the University and with the development and progress of education in London and the country, then it would seem that outside informed opinion has as much an opportunity of expressing itself with 17,

plus four representatives, as it has with 22 representatives of Convocation plus four ex-officio members.

Mr. Adams: May I correct the hon. Gentleman on one point? I understand that two of the four co-opted members are academic representatives.

Mr. Linstead: One of the co-opted members is head of the Post-graduate Medical Federation and the other is an ex-Vice Chancellor. But they are, nevertheless, co-opted according to the statutes. It may be that two of them can be regarded as academic people, but the other two members, one of whom is the Dean of St. Paul's, might be reasonably regarded as informed outside opinion. If Convocation has 17 representatives on the Senate, surely Convocation has as much opportunity of making its voice heard, as it would if it had 22 representatives. If it has not a majority on the Senate, and if it is merely to have representatives there, surely 17 representatives are as good as 22. I cannot see any virtue in the additional numbers.

Mr. C. W. Gibson: I see the point the hon. Gentleman is making, but if there is no virtue in adding to the numbers of the Convocation representatives, what virtue is there in adding to the number of professors who sit there?

Mr. Linstead: Perhaps the hon. Gentleman has not entirely informed himself of the proposals of the new statute, which is not to add more professors because more professors would come on to the Senate through the Faculty representatives who are to stay at 17. The new statute adds four more heads of schools. They are not professorial representatives primarily. They are administrative heads of the constituent colleges of the University.

Mr. George Chetwynd: Is it not clear that if a move is made to increase the Convocation representatives by five, there will have to be a similar increase by teaching staffs, which will bring in many of the people that my hon. Friends have mentioned?

Mr. Linstead: It is significant that the teaching staffs have not asked for any increased representation. They are satisfied with their numbers staying at 17. It may be assumed, as they have said nothing, that they are satisfied that the


increase in the number of representatives of the schools to 18 is in accordance with the recommendation of the Hilton Young Report, which required that schools should have generous representation.
The conclusion I would ask the House to draw is that the merits or demerits of this question depend upon whether one sees the Senate of the University as a place where everything is decided by the counting of heads—whether it is to be regarded as a battlefield of contending interests—or whether it is to be a body mainly concerned with the promotion of university education in London and in the country as a whole, in which case argument and persuasion, and not the counting of heads, are the crucial things that matter.
One other consideration to which the House ought to address itself is whether this is one of those sets of circumstances in which it is proper for Parliament to intervene in the affairs of a self-governing institution such as a university. It is perfectly true, of course, that this House has that power. It has it in the case of three or four universities only. It is significant that in the case of a very large number of universities —Birmingham, Bristol, Leeds, Liverpool, Manchester, Nottingham, Sheffield and, generally speaking, the University of Wales, Parliament has no power to interfere with the amendment of their statutes. I think it is only in the case of four universities that the House has the opportunity, which it has tonight, of considering their internal constitution.
The House, therefore, ought to consider very carefully what are the circumstances and occasions where it should exercise that power, because we are all jealous of the independence of the universities. The last thing any of us want is to see the universities become involved in politics, certainly party politics. We must remember there is a statutory method of resolving these difficulties, which is to appeal to the Queen in Council. That method is being exercised in this case in favour of the University.
I suggest the only circumstances in which Parliament ought to intervene is if there has been some irregularity in the procedure, or what is proposed to be done is obviously contrary to public policy. I cannot see that a change which is in full accord with the recommendations of the

Hilton Young Committee in 1926, which is a purely internal matter for this University, can be regarded as being contrary to public policy.
If, let us say, the University proposed to alter its statutes to exclude women from taking degrees or something of that kind, obviously there would be cause for this House to intervene. But I submit this is a purely domestic matter. It is a matter that should be left to the University, with the right of appeal to the Queen in Council which has already been exercised. I submit it is not consonant with the dignity of Parliament or the University that Parliament should intervene in such a domestic matter. For those reasons I strongly advise the House not to agree to this Prayer, but to allow the statute passed by the University to take effect.

12.4 a.m.

Mr. Somerville Hastings: Whatever view we may take of this Prayer I think we all agree about the very great importance of the University of London which, I am told, spends about £6 million a year on teaching, 70 or 80 per cent. of the money being derived from public sources. The academic government of the University rests with the Senate and in the Senate teachers, undergraduates, Convocation members and representatives of the schools of the University are roughly equal in number.
The proposal is to increase the number of these representatives and I submit that to allow two out of three to be teachers or representatives of the school is not to allow sufficient representation of the public. Teachers and the representatives of the school, although important people whose voice must be heard, are very liable to take, if alone, a one-sided view. They may very well look upon the special department for which they are responsible as being all-important, and be unable to take a broad view such as we would like to be taken in view of the importance of the University.
The very last thing I would suggest is that they would use their power on the Senate for their own special purposes, but they may get the needs of the school or the section they represent out of proportion. I belong to the medical profession, and we are very particular when we or our families are ill never to treat ourselves or our families for the very reason


that we feel that our views will not be unprejudiced. Therefore, I think the point is that somehow or another the public should be fully represented in even the academic teaching of a body like a university.
The question is how that representation of the public can take place. I think that those who decided on the constitution of this University were wise in making a considerable representation from Convocation, that is, from the graduates of the University. I was for many years a member of Convocation so I know something of what takes place on it. I am sure, and I was at one time not an unsuccessful candidate for the Senate, that the graduates of the University are very jealous of these interests and of the teaching that goes on. To increase the number of representatives of the school and the teachers, and not to increase the representatives of the public through the graduates of the University, will be a very unwise step.

12.8 a.m.

Mr. Henry Brooke: The only reason I venture to take part in this important debate is that I find to my surprise that I am the only member of either of the two governing bodies of the University of London who happens to be at this moment a Member of the House of Commons also. I am not a member of the Senate, and I am not a graduate of the University. In that sense it gives me a special independent position in this matter. I happen to be one of the two representatives appointed under the statutes by the L.C.C. to the financial controlling body of the University, on which what I might call the external public interest is amply represented.
The overwhelming point in this debate, as it seems to me, is that all these matters which we are discussing here have been thrashed out in full before a committee of the Privy Council, consisting of three wholly independent men, two of whom were at one time Members of this House, so that as well as being versed in the law they are particularly qualified to understand the public view on these matters.
With great respect to the hon. Gentleman the Member for Islington, East (Mr. E. Fletcher) it really cannot be maintained that that committee, as he said,

considered all this from a legal point of view only. I have had an opportunity of seeing the case that was put up by both sides—by Convocation and by the University—to the committee of the Privy Council, and Convocation when it was addressing itself to the Privy Council certainly did not take the view, which I think the hon. Gentleman has conveyed this evening, that the Privy Council was only concerned with legal considerations.
The case of Convocation was presented under three headings; first, that the proposed amendment is unconstitutional and ultra vires—that is the legal part—second, that the proposed amendment is unnecessarily prejudicial to the existing statutory rights of Convocation, and, third, that there are not positive reasons sufficient to justify an amendment of the kind now proposed. Of those three, only one is a legal argument, and the committee of the Privy Council gave its opinion in the plainest terms that the amended statute relating to the composition of the Senate should not be disallowed. Very simply, Convocation argued its case under all those three headings, and the Privy Council rejected the case as a whole not simply on legal arguments.
The hon. Member for Barking (Mr. Hastings) has argued that there will not be sufficient representatives of the public on the governing body of the university if the amended statute goes through. In fact, there is, and will be still, a greater representation of the public in the Senate of this University than exists in any other English university. Certainly in Oxford, which I know better than London, there is no representation of the "old boys," so to speak, in any way comparable to the representation of Convocation in the Senate of the University of London.
Nor do I think it is quite fair of the promoters of this Prayer to argue that this new statute should be disallowed on the ground that other and more fare reaching amendments may come along at a later date, because that is not what the House has before it. If other and more far-reaching amendments in any direction come along, it will be clearly open to objectors to argue their case afresh against those before the Privy Council and this House. Tonight, we must decide on the actual issue and not on some hypothetical issue of the future.

Mr. Leslie Hale: The hon. Member appears to be repeating an argument which rather shocked me when it was made from the other side of the House. It is that if Parliament is invested with responsibility we should not exercise it because some other body has already come to a decision on the point. That seems to be arguable and I shall be grateful if he will say if notice was taken of the Third Report of the Public Accounts Committee, which said that Parliament had inadequate information as to the way this money was spent.

Mr. Brooke: All members of the Court, which is the financial body, have received copies of that Report from the Select Committee, and it must be most thoroughly considered by the Court. But I must point out that at the moment we are discussing the composition of the Senate and not of the Court. The Senate is an entirely different body. It is the Court alone which deals with finance, and the Senate which deals with academic matters.

Mr. Hale: With respect, is not the hon. Member wrong about that? Is it not only the Senate which can introduce a Motion of this kind and which could introduce an alteration of the statute of the University which would give effect to the recommendation of the Committee?

Mr. Brooke: The hon. Member is now trying to bring in financial considerations, and I am pointing out that this amending statute has nothing to do with finance. If it had any bearing on finance it would have to come before the Court, and the Court could itself raise objection, if it so wished.
Of course, I grant the hon. Member's first point—that any matter which is within the scope of Parliament can be raised and should be debated here, although it would have been more courteous of the sponsors of this Prayer to inform the University that they were putting it on the Order Paper. The prayer appeared on the Order Paper last Wednesday, and the University authorities received no intimation from them whatever. They heard by a circuitous channel on Thursday evening.

Mr. E. Fletcher: Surely the hon. Member knows, and the University knows, that for months there has been

a most violent opposition in the University to this measure? It has been well known that a circular has been in preparation, signed by no fewer than 14 members of the Senate, canvassing the support of this House against this particular statute.

Mr. Brooke: That may well be so. Nevertheless, it would have been an act of courtesy, within the University, for someone who is an ex-member of the Senate and who is concerned in this Prayer, to have informed the University, because the University authorities could hardly be expected to watch the Order Paper daily to see whether the Prayer was coming at short notice. But I do not want to press this. I shall be grateful if the House will allow me to get back to the main argument.

Mr. Geoffrey Bing: It is a most monstrous charge. It is the duty of the University, with a statute of this nature, to realise that it is subject to Parliamentary control. It is not the duty of Parliament to inform everybody who may be influenced by anything done in the House. The hon. Gentleman knows that with the congestion of Parliamentary business this is the only night the matter could be brought up, and it is the duty of the University to have sufficient interest in their own affairs to watch the Order Paper.

Mr. Brooke: Naturally, the promoters of the Prayer were at liberty to put it down whenever they wished, but a university and all members of a university should combine to maintain the highest standards of courtesy in all such matters.
As to the proportions, the one fact which is beyond dispute is that two of the three parts of the Senate should be kept equal: the representatives of Convocation and the teaching element. I take it that the promoters of the Prayer would agree that if they have their way, and if the Convocation element is increased by five, the teaching element should also be increased by five. It is significant that the teaching staff—the Faculty representatives—do not want that increase and I fancy that one of the reasons is that they appreciate that it is important that a body of this kind should not grow over-large. That is one of the strongest arguments against an


automatic increase on the one-third principle. At present, the size of the Senate is to be 59 or 60, and if those who speak for Convocation have their way it would be increased by a further 10 members.

Mr. E. Fletcher: There is no proposal to increase the number of teachers. The test here is between those who are democratically and representatively elected and those who are paid members of the University, whether teachers or heads of schools.

Mr. Brooke: It would fly in the face of all principles on which the Senate was originally constituted if the Convocation element was to be increased without at the same time increasing the representatives of the teaching staffs.

Mr. Ivor Owen Thomas: Does not that apply both ways?

Mr. Brooke: It is very relevant in the one way I have mentioned.
This matter has been considered at very great length within the University and I do not think it is fair to argue that it has been steam-rollered through the Senate. The chairman of the Statutes Committees was Sir David Hughes-Parry, a person known to probably many Members in the House, who I should have thought was one of the most considerate and painstaking of chairmen. I cannot think of him along with steam-roller methods, and it is a travesty to suggest that this change has been forced, in the manner of an ultimatum, upon Convocation. On the contrary, every effort has been made to try to seek agreement.
I wish to remind the House that all these arguments about finance are irrelevant, because we are not considering the body which controls finance. The finance of the University is entirely within the purview of the Court. The Senate provides not more than half the total membership of the Court. The other part of the Court is composed of representatives appointed by the Crown, by the London County Council, by the councils of the Home Counties, and so forth. That is the way in which public control over these enormous sums of public money is maintained.
What I submit is relevant is that the House should be chary, even though it is within its rights, about setting aside in a thin House after midnight and after a short debate, a decision reached after most thorough and searching examination by a committee of the Privy Council, on a matter which reached the committee only after it had been fully debated inside the University.
I trust that this House will ever maintain the principle that the universities should be given the maximum amount of independence. On all these grounds, although I grant that the hon. Member is fully within his rights in raising the matter here, I submit it would be a grave mistake if Parliament were to reverse the decision of the Privy Council.

12.22 a.m.

Mr. C. W. Gibson: I am not a graduate of the London University, although, as a Londoner, I have great pride in the University. I was surprised at the type of argument used by the hon. Member for Putney (Mr. Linstead). He talked about counting heads and suggested that merely adding five or more to the Senate would not make any difference. This proposal arose because heads were counted in the Senate. I am informed that there was a majority vote in the Senate for putting through this proposal, which clearly will upset the existing balance of voting power in the Senate if it is carried.
There is no doubt about there being enormous opposition to it, including that from a number of the existing members of the Senate. It seems to me that the House, in the exercise of its proper powers and functions, must take note of it.

Mr. W. F. Deedes: The hon. Member referred to upsetting the voting power of the Senate. In what way will it upset the voting power?

Mr. Gibson: I said that it would upset the balance of voting power. The constitution establishing the Senate laid down a certain number as representing the Convocation and the other groups which make up the Senate. If five more are added, those who represent the Convocation will to that extent be further outvoted if a vote has to be taken, and it is on that point that members of the


Convocation have raised this rather fierce statement.

Mr. Linstead: The hon. Member has referred to me. May I ask him if he sees the University from now onwards as a tug-of-war or a battle-field, with Convocation on one side and the rest of the University on the other; so that if any more are added to the Senate five votes are automatically put at one end of the tug-of-war?

Mr. Gibson: I think it would be lamentable if that happened.
Nevertheless, it is true that when matters are raised in the Senate and there are differences of opinion—as on this very issue—one can only settle it by counting the heads; and to upset the existing balance of the votes seems to me to be asking for difficulty. I have read the arguments in favour of both the change and those opposing it, but I think that one upsets the democratic balance of the Senate if the proposal is adopted.
The Privy Council Committee has cleared up the legal point, and what we have tonight to determine is whether it is good public policy, at least so far as Londoners are concerned, that there should be this change in the composition of the Senate. Having read all the documents that I have had, I think it is bad policy to make a change and I shall support the Prayer; for I want to keep our universities as free as I can. I hope that the House, in view of the arguments put forward, will decide to maintain the existing balance of representation on the Senate, which is already accepted by all sections except one.

12.26 a.m.

The Financial Secretary to the Treasury (Mr. John Boyd-Carpenter): It might be for the convenience of the House if I indicated at this stage what are the views from this bench. I understand that this is the first Prayer of this character that has been tabled for a great many years, if indeed, at all, and it arises from a dispute inside the University of London.
I propose to say nothing at all about the merits of the dispute for it would not be proper that H.M. Government should even appear to interfere in the internal affairs of a university. As the right hon. Gentleman the Member for South Shields (Mr. Ede) is aware, it is the settled policy

of Governments to preserve the autonomy of the universities and we are very anxious not to infringe their independence, whether in matters of academic policy, or in discretion.
My duty tonight, therefore, is merely to try to put before the House something of the background and procedural considerations, but not to influence hon. Members as to the attitude which, ultimately, they will have to adopt if the Motion is put to the vote. Incidentally. one could say in parenthesis that this is peculiarly the sort of issue on which hon. Members representing the universities would be of great value to the House, but they are not with us.
The position has been accurately stated by the hon. Member for Islington, East (Mr. E. Fletcher) and it is not necessary for me to repeat it. But one point I think I should make clear is that Convocation consists of the whole body of the registered graduates of the University. One hon. Member seemed to think that it included the undergraduates. The dispute between the two bodies, as is clear, arises from what, in University parlance, is called a statute; not, of course, the statute as known by that word in this House.
The point which has arisen is whether or not the representatives of certain of the institutions, of which, in a sense, the University is a federation, should be increased from 13 to 18 by adding one representative each of the British Post-Graduate Medical Association, the School of Oriental and African Studies, and the Wye Agricultural College, and by adding two members to the existing two who represent the 13 medical schools in the University.
As I understand it, the argument for the statute is that the work of the Senate requires for its due performance the inclusion of representatives of institutions so far not represented or inadequately represented. On the other hand, the argument for the Convocation is that it reduces their voting strength in the Senate from a proportion of 17 out of 54 to a proportion of 17 out of 59. I think that is the substance of the dispute.
I ought to remind the House—and this is an important point which we should have clear on the procedure of the matter —that, following the procedure which was


laid down in the Schedule to the Act of 1926 passed by this House, Convocation presented a Petition to His late Majesty in Council, who, as it happened, was the Visitor to the University, as is Her present Majesty. The matter was then referred for consideration by a committee of the Privy Council, and it is clear that what was referred was not solely the legal issue, but the general issue as well.
That Committee of the Privy Council was composed of the noble Lord, Lord Reid, whom many hon. Members will remember with affection as a Member of this House, Mr. Willink, now Master of Magdalene College, Cambridge, and also a very distinguished former Member of this House, and Sir John Beaumont, a distinguished judge. There was a hearing which lasted three days, on 7th, 8th and 9th April. It is material for the House to be aware that the University was represented by eminent counsel—Mr. Diplock, Q.C., with the noble Lord, Lord Hailsham as his junior—and, at the expense of the University, Convocation was also represented by eminent counsel—Sir Andrew Clark, Q.C., Mr. Duff Dunbar and others. At the end of the hearing, the Chairman, Lord Reid, announced that the committee had decided to recommend that the Petition of Convocation should be disallowed. Accordingly, copies of the amending statute were tabled in this House, and that brings me to the proceedings tonight.
Under the University of London Act, a Prayer can be moved for the annulment of the statute. It is no part of my duty, and it would be quite wrong for me, to indicate any views on the merits of the matter, but I think I am entitled to make one general comment on procedure. It is the undoubted right of this House, under the procedure of the University of London Act, to recommend the annulment of this statute. It is an express provision wholly within the rights of this House. On the other hand, it is a consideration which might have some weight in the minds of hon. Members that, after a three-day hearing before an eminent judicial body, with both sides represented by counsel, the decision of that body is obviously a material factor which hon. Members will consider and not lightly disregard.
No doubt, as the debate continues, the House will have the assistance of hon. Members who express conflicting points of view on the matter, but I think that the facts of the matter, the general framework of the dispute and the point of procedure at which we now find ourselves have been fairly stated, and, no doubt, in due course, after further speeches, hon. Members will have to make up their minds on the merits of the matter on which way this question is to be decided.

12.34 a.m.

Mr. Ede: I agree with the Financial Secretary to the Treasury that it would be most unfortunate if this matter were regarded as one in which either the Government or the official Opposition took sides and gave advice to Members of the House. Therefore, although I have decided views, I wish it to be understood that they are my personal views, and that they should not influence anyone beyond the weight of the arguments which may be adduced.
I think I am a little freer than the Financial Secretary in being able to express personal views, because it is difficult for a Member of the Government to divest himself, even momentarily, of his responsibility as a Member of the Government. The University of London is, in a way, a production of this House. It was founded as a result of discussions in the House at a time when the two ancient universities were closed to a large number of the inhabitants of the country by the imposition of religious tests.
Those who founded the London University desired that it should occupy a unique position not only among the universities of this country, but of the world. For more than 100 years it has carried out that task with considerable success. It has enabled a large number of people who otherwise would have been unable to do so—sometimes because of their religious views and at other times because of poverty—to enjoy a university education and to become graduates of an established and recognised university of high repute. This has been to their own advantage, and to the advantage of the country in which they lived.
The University of London is an international university whose examinations are held not only in this country, but in a great many English-speaking countries. The roll of its graduates includes people


who have never been to this country and are not likely to come, but yet have benefited through their association with the University, and have enriched not only this country, but the world as a result.
It is therefore desirable that the body which represents the graduates of a University founded on these lines, and which has operated on these lines, should not have its weight in the counsels of the University diminished by any act at present. That is why I intend to vote for the Prayer. I think that this particular proposal would diminish the influence of the representatives of the ordinary body of graduates in the counsels of the University. I would not suggest that the constitution of the Senate is incapable of improvement. The Senate of the University is a human institution, and I know of no human institution which is not capable of improvement and which probably does not become worthy of consideration for improvement as the years go by.
I admit that in recent years the establishment of new schools and colleges in connection with this University has given rise to difficulties which will probably have to be met in the future. I would suggest that there might be some arrangement similar to that by which bishops sit in another place. There, three bishops—London, Winchester and Durham—get seats as soon they have been advanced to their distinguished places in affairs ecclesiastical. The rest get a seat in rotation by seniority.
That would be one way. I do not think it is an ideal way. I think there are perhaps some junior bishops who would be rather better than the senior ones sitting in another place, if I may criticise the composition of another place in so small a way as that, although as a Non-Conformist I would be better pleased if there were no bishops there at all.
But the various schools of the University might select from among themselves a number of the heads who should sit and thus not disturb the balance, because I can see that as the schools of this University grow in number—and I am quite certain that they will grow in number within the Home Counties during the next few years —it will obviously be necessary to make an arrangement by which there is some

selection from the heads because unless the balance of voting in the Senate is preserved it will become quite unwieldy.
I should have thought it was in the best interests of the University, in view of the controversy which has arisen within it that this statute should not be brought into operation, that this House through its action should secure that further thought be given to this matter, and that, as a result of the persuasion and argument for which the hon. Member for Putney (Mr. Linstead) pleaded, there might be evolved some scheme which would give the schools and colleges not now represented some means by which they can secure representation, and, at the same time, the composition of the graduates in Convocation should be preserved.
In view of the history of this University, I hope that will be done. I do not wish to see University of London become a mere copy of either Oxford or Cambridge; I do not want to see its governing body the same as the governing body of either of those universities. It has a unique place in the educational affairs of the world, and that unique place can best be preserved and safeguarded by securing that the body of graduates, including especially external graduates of the University—again a body almost unique in the history of education in the world—shall have a sufficient influence in the current control of the University and in its development.
I am a matriculant of London University. In fact, in my young days one could hardly escape becoming a matriculant of London University. When my hon. Friend the Member for Barking (Mr. Hastings) claimed for undergraduates the right of representation in Convocation, I agreed at one time that it might almost be universal suffrage in a few years' time if that was brought about.
We have had a very good-tempered debate on this matter, and, speaking for myself and not in any way for any party in the House, I suggest that no harm will be done to the University by carrying this Prayer tonight, but that as a result of so doing the beneficent influence of persuasion and argument will enable a scheme to be evolved which without the counting of heads might enable us to feel that it had the support of the great body of graduate opinion in this University.

12.45 a.m.

Mr. Ian Harvey: I want to do nothing else than to prove physically that this is not a party issue, as it did begin to become because of the deployment of the arguments on both sides of the House. I feel it is a matter of considerable regret that this issue should have had to have come to this House. I feel the argument put forward that we should not intervene was, in fact, the very argument for our intervening, to prevent the tug-of-war, which it would appear has started, from continuing.
I regret very greatly that I should find myself in this debate, divided from my hon. Friend the Member for Putney (Mr. Linstead), for whose sincerity and knowledge in this matter I have very high regard. I feel that he did not bring out the point, which seems very clear, that we are not considering the numerical issue so much in the matter of the heads of colleges and numbers of the Faculty, as the community of interests which actually bind them together, as opposed to the graduates who come from a different quarter.
I agree that the University of London has to have a character of its own. It is the very balancing of these academic and non-academic interests which will impart to it that character. I think that much of the argument deployed has been of the nature of arguments one would have heard in the Universities of Oxford and Cambridge. It is because of that, that I am sceptical whether it does apply to the same degree in this particular case. There is one other aspect of the present proposal. I think the hon. Gentleman the Member for Hampstead (Mr. H. Brooke), complained that it was not right to bring in these matters. I would have thought it was very relevant and that if we take this action we are creating a precedent which will subsequently enable the University, without any justification for our intervening, to increase again and again, the numbers of the heads of schools.
I believe that if we study the matter we shall find, apart from those at present listed for inclusion, that there are many others on the waiting list. That will subsequently destroy the whole structure. I cannot agree more that it would be beneath the dignity of this House to inter-

vene unnecessarily in what was only a university row. I should like personally to pay tribute to those who enabled the Convocation case to be brought forward as it was. It is clear that this matter has reached an impasse and that if we do proceed in this matter the tug-of-war will develop. I most earnestly hope that we may terminate the proceedings in order that all those concerned may be able to think again.

12.49 a.m.

Mr. W. R. Williams: I am sorry that on this occasion that I am not able to agree with my hon. Friends on this side of the House in their plea for this Prayer. They will probably say that if I had had a university education, I would not be quite so foolish. I have taken the trouble to examine, as far as I could, the issues involved. I have read the statement issued by the Vice-Chancellor, on behalf of the University authorities, and I have read, as carefully as I could, the statement issued on behalf of the graduates of the University of London.
I have come to the conclusion that we are in danger of missing the real merit of the amendment to the statute in this quarrel about the ratio of representatives in the Senate. The important aspect of the amendment to the statute is that we are bringing into the counsels of the University at least three institutions that, in my opinion, are worthy of being there. There is no need for me to enlarge upon them. The School of Oriental and African Studies is an important institution, and it will be to the general interest of the University of London if that institution is represented in its Senate.
I understand that Wye College is an important agricultural institution. Having regard to modern requirements in that field I should have thought it would have been in line with the tradition of the University of London, to which my right hon. Friend the Member for South Shields (Mr. Ede) and the hon. Member for Harrow, East (Mr. Ian Harvey) paid tribute, that Wye College should also be represented in the Senate.

Mr. Ian Harvey: As the hon. Member has mentioned me, I should like to make it clear that there is no censure in this Prayer or suggestion that these institutions are not worthy to be represented.


The issue is that if they are, some measure should have been taken to preserve the balance. That is the whole cause of the argument.

Mr. Adams: What has my hon. Friend the member for Droylsden (Mr. W. R. Williams) to say about the other 16 schools and colleges which would be entitled to representation once this principle was admitted?

Mr. Williams: As an old trade union negotiator I never put up my own hurdles. I wait until they appear and then try to find some means of surmounting them. In reply to the hon. Member for Harrow, East, I would say that the proportion or ratio, as set down in 1926, and as varied in this statute, is the criterion in this debate and not the claims on merit of these important institutions to be represented in the Senate. But those merits seem to me to be the important issue.
I know some very hard work has been done on this subject by certain people. I agree with the hon. Member for Hampstead (Mr. H. Brooke) that anybody who says that Dr. Hughes-Parry would use steam-roller tactics is either misleading the House or does not know Dr. Hughes-Parry. He is well known in Wales as the prince of mediators and if there is anybody unlikely to gate-crash or to use the steam-roller it is he. Therefore, if Dr. Hughes-Parry was chairman of the committee concerned I cannot agree with the undergraduates that the steam-roller has been used.
I do not propose to fall into the error, into which one of my hon. Friends has fallen, of regarding the graduates as a democratic body and of talking about a democratic election in connection with 30,000 people out of the whole population of London which benefits from and contributes to the University of London. It is a misuse of the term "democratic election" to employ it in this connection. It is only democratic in so far as it relates to the graduates who are a very small proportion of the whole. My old trade union association again makes me feel I could not accept that basis as a very valid one for a democratic election.
Even granted that that is so I want to ask one or two questions. There are 30,000 people entitled to vote on this

issue. How many voted in favour of this Prayer? My information is that the well attended meeting referred to in the statement made on behalf of the graduates was attended by only 300.

Mr. Michael Foot: I apologise to my hon. Friend for interrupting, but can he say what proportion of members of his union attend a meeting?

Mr. Williams: Unfortunately, not as many as I should like to see so that we could say we have a majority from the democratic and intelligent thinking people, but if it was a matter of great importance there would be a referendum, and if I found that only 300 out of 30,000 replied I would not think it a representative return from the people I represented.

Mr. E. Fletcher: The hon. Gentleman put a question to me which I would like to answer. I do not know the exact number of graduates who attended the meeting but the significant thing is that the voting was almost unanimous. There were representatives of every faculty and both political parties.

Mr. Williams: A meeting can be so easily packed to obtain unanimity. I am thinking of quite a number of public bodies with which I am associated. If a few people feel strongly about a matter and are prepared to go to a meeting it is not difficult to get a particular decision if other people are indifferent.
Another question I should like to put to my hon. Friend is this. Have Convocation signed this appeal? My information is that the chairman of Convocation is not one of the signatories to this appeal. Is there any significance to be attached to that very important omission?

Mr. I. O. Thomas: My hon. Friend is probably answered by the fact that it happens that the chairman of Convocation is one of the four ex-officio members of the Senate, and it would be rather invidious, in his position, for him to take any part in this matter.

Mr. Ede: Why did not the hon. Gentleman ask Dr. Hughes-Parry when he was having tea with him this afternoon?

Mr. Williams: I always thought that even new and inexperienced Members of the House never disclosed in the Chamber what happens in the Dining Room, the Smoke Room or the Tea Room. It might interest my right hon. Friend to know that I know something of the work of Dr. Hughes-Parry, and that I take serious note of what he says. I do not think that my right hon. Friend's remark was one of the best he has made in the course of his time in this House.
I am assuming that if this Motion is carried it will be necessary to go back again on this issue that we should increase the number of representatives of graduates. I am assuming that if that is done to maintain the balance it is not unreasonable to assume that the Faculties of teachers will also want to strike a balance with Convocation. [HON. MEMBERS: "No."] We have had an expression of opinion that under the amendment of the statute the teachers were not particular, but I suggest that if the position is reversed and we are to add to the number of representatives of graduates that it is not unreasonable to assume that the representatives of the Faculties will want to have the status quo maintained.
If that is so, what advantage is gained from either side? The situation will be identical with what it is now with the only exception that we shall have added to the people who can make a contribution to the general welfare of London University of representatives of three institutions, plus two more from the general medical schools, on the councils of the University. I think that will be to the good and I see no reason why this House should be allowed to make a decision unfavourable to that in their anxiety to deal with what I regard as a side issue and certainly not something that I would call a democratic issue.

1.2 a.m.

Mr. George Chetwynd: I should like to compliment my hon. Friend the Member for Droylsden (Mr. W. R. Williams) on the fervour with which he put the case against this Prayer. I part company with him after that. It seemed to me that he put a very good case why we should accept the Prayer so that the whole issue can go back to

the Senate and Convocation for further consideration.
The Financial Secretary to the Treasury gave a very fair and objective account of the developments which led up to this Prayer being tabled and my right hon. Friend the Member for South Shields (Mr. Ede) made a very good case why the representation of the schools on the Senate should not be increased to the detriment of the graduate body. Now we have heard from my hon. Friend that he thinks all is not well with Convocation and that they ought to put their house in order also. But if we let this amended statute go through we shall have lost all control over the issue for some time to come.
If we accept the principle behind the amended statute the membership on the Senate of Convocation will remain static, the representation of the teachers will remain static and the representation of the schools will be increased as and when certain schools develop in importance. As it seems that there are a number, four at least, of schools who should get further representation on the Senate, that will upset the balance even more in a very short time.
The hon. Member for Putney (Mr. Linstead) spoke of the need to be generous to the schools, but if we increase the representation of the schools from 13 to 18 so that it out-numbers the Convocation representatives and the teachers' representatives that seems to be overgenerous to them, especially when we consider that they may be coming forward for some further increase in the future. If this statute is passed it will upset the balance of representation which is the unique feature of London University.
When the hon. Member for Hampstead (Mr. H. Brooke) was speaking against the Prayer, he seemed to think it was a desirable thing that we should upset that balance to get more in line with the older universities. The great pride of London University is that it is different from the older universities in that it draws its students from a wider field and has a much more democratic outlook in many respects. We should do all in our power to preserve that and not to whittle it away, as would happen if the Prayer was defeated.

Mr. Brooke: The hon. Member has misunderstood. I was not making any suggestion that the University of London should be aligned more closely with the older universities, but taking up a point made by the hon. Member for Barking (Mr. Hastings), when he suggested that under the new plan there would not be sufficient representation of the outside public. I pointed out that the University of London, as I know he agrees, will even so have greater representation of the public outside than any of the other universities.

Mr. Chetwynd: I accept that completely.
May I make one important suggestion? It is that the whole question of representation on the Senate must be looked into afresh. To do that with a clear mind and without acting irresponsibly we ought to accept this Prayer and refer the whole question to the Senate, so that, after further thought, they could work out a method of including the schools on some kind of representative basis. It could be a rotating method, or the idea of representation of the bishops in another place

Resolved,

That an humble Address be presented to Her Majesty, praying Her Majesty to withhold her approval from the Statute made by the Senate of the University of London on 21st March, 1951, amending the Statutes of the

that my right hon. Friend the Member for South Shields did not think much of, or the system adopted by the Security Council of the United Nations, with permanent members representing the more important bodies in the University, plus a number of elective bodies, representing certain clearly defined parts of the University—the medical schools, agricultural departments, language schools, and so on. Of course, there should be no right of veto by the major powers, or it would be wrecked.

Tonight's debate proves the value of Parliament in bringing its mind to bear on this topic. If, as a result, we can accept this Prayer and send the matter back to the Senate for further consideration, we shall end up with more agreement than if this new, amended statute goes through, because that would be a source of grievance for a long time to come to a large number of those interested.

Question put.

The House divided: Ayes, 27; Noes, 17.

Division No. 139.]
AYES
[1.7 a.m.


Acland, Sir Richard
Gibson, C. W.
Pursey, Cmdr. H.


Adams, Richard
Grimond, J.
Ross, William


Bence, C. R.
Hale, Leslie (Oldham, W.)
Royle, C.


Bing, G. H. C.
Hastings, S.
Simmons, C. J (Brierley Hill)


Chetwynd, G. R.
Hughes, Hector (Aberdeen, N.)
Thomas, Ivor Owen (Wrekin)


Delargy, H. J.
Jones, David (Hartlepool)
Wallace, H. W.


Ede, Rt. Hon. J. C.
Lever, Leslie (Ardwick)
Wilkins, W. A.


Fletcher, Eric (Islington, E.)
Lewis, Arthur



Foot, M. M.
Mallalieu, J. P. W. (Huddersfield, E.)
TELLERS FOR THE NOES:


Garner-Evans, E. H.
Parker, J.
Mr. Albu and Mr. Ian Harvey.




NOES


Arbuthnot, John
Nutting, Anthony
Summers, G. S.


Bishop, F. P.
Ormsby-Gore, Hon. W. D.
Vosper, D. F.


Bossom, A. C.
Orr-Ewing, Ian L. (Weston-super-Mare)
Williams, W. R. (Droylsden)


Butcher, H. W.
Simon, J. E. S. (Middlesbrough, W.)



Conant, Maj. R. J. E.
Spence, H. R. (Aberdeenshire, W.)
TELLERS FOR THE NOES:


Deedes, W. F.
Stuart, Rt. Hon. James (Moray)
Mr. Linstead and Mr. Henry Brooke.


Gordon Walker, Rt. Hon. P. C.
Studholme, H. G.

the University, a copy of which Statute was laid before this House on 29th April.

To be presented by Privy Councillors or Members of Her Majesty's Household.

STANDS, CLANDOWN AND YEOVIL (ERECTION)

Motion made, and Question proposed, "That this House do now adjourn."—[Mr. Oakshott. ]

1.15 a.m.

Mr. Edwin Leather: The subject which I wish to raise for the attention of the House is something which, at first sight, may appear to be just a small constituency matter; just a small specific issue. But I would respectfully suggest that it is something which affects a general principle and which I would ask my hon. Friend to reconsider. It is the possibility of granting a licence for anyone to build when that person has all the materials available.
This specific case concerns a football stand in a mining village in my consituency and where no such facility exists at all. The argument which the local people wish to put forward for this stand to be erected, and which action I very strongly support, is that the stand, or shelter, or whatever one cares to call it, will in no way use scarce materials. Therefore, it is quite unjustifiable to turn down the application on that ground. The extent of that is so tiny that it could not in any way interfere with the housing programme, or the building of anything else of any kind; and it is quite unreasonable, if I may say so with respect, for the Ministry to be so "sticky" in refusing a licence.
The cost is a mere £650; that is all. All materials are available, and have been for two years. Indeed, they have been lying around and getting rusty. The labour would be entirely voluntary, and drawn from the village football team, so that there would be no demand whatever on resources for things which the country might consider as more important than the provision of a football stand at Clandown.
But this is not merely a football stand; in that village, it would be an institution, for it would be in the only available field for miles around. Not only is it used for football, but for fetes, and the children's outing, and every social affair on which the leisure life of the village hinges. There is no shelter available for these people at all, and I would hope that the kind hearts of the Civil Service might remember that fact.
I have written to my right hon. Friend on this subject, and he replied to me on 18th February; the important paragraph of his letter was that:
in present circumstances, he could not allow steel to be used on work which, although desirable, was not of first importance.
Now that reply, if I may respectfully say so, is neither valid nor even relevant. The steel is there; I have already said that it has lain there for the last two years after it was bought at Air Ministry disposal sales. The Air Ministry put up this material, and my constituents, with a fund they had organised, bought the stuff; and they have still got it. It could not be used for anything else. The Government sold it because it had no further use for it, so that there is no question at all of wanting to use vital steel.
That is something which my hon. Friend cannot put before the House for one moment. Of course, he may say that asbestos sheet is being used, but, far from there being a shortage of that at present production is being cut down because the producers just cannot sell that which they have already got. These are the only two raw materials concerned, so that there cannot be any question of shortage.
I wrote back to my hon. Friend, and, on 27th March, he replied stating that this could not be done because of the need "to limit capital investment." Again, I say, with great respect, that the goods have been paid for, so that, if there is any capital investment in this £650, most of it has already been spent some time ago, and the Minister cannot get it back. Therefore, to say now that to put the stand up by voluntary labour will cut into the country's capital investment programme is stretching things a bit too far.
I appreciate the Minister's difficulties. As I understand, his position is that if he once allows people to put up these buildings he will be in an impossible position in trying to differentiate between absolutely genuine cases and cases that are, shall I say, a "fiddle." It is the difficulty of differentiating between cases like this, which is patently and obviously genuine, and the case of the chap who does a black market deal, picks up materials under the counter and uses that as an excuse to jump the queue.
Surely that is not insoluble. Surely the wit and experience of the Ministry is such that it is possible for its regional officers to give an opinion and say, "That is obviously a genuine case". The Ministry's regional officers have great experience in judging these things. Knowing the people in the local areas, they know in most cases who are the people likely to try to pull a fast one on them and the people who will not.
Therefore, I put this case, generally and specifically, to my hon. Friend. Will he not look at this matter again to see if his Ministry, with all the experience, wisdom and skill available to it, cannot find a way of judging between the perfectly obvious and genuine case and those that are not, and, secondly, will he look again at this specific case, which is so obviously genuine that neither he nor any of his officials would deny that it was genuine, to see if it should not be granted a licence?
We really have reached an extraordinary position in which a group of decent, honest citizens are in need of this facility for the social life of the community, in which everybody acknowledges that they want to have it, and in which it is patently clear that their having it will make no charge on the capital investment programme, use no vital raw materials or interfere with anything else. I ask my hon. Friend to reconsider the matter, because I think the Ministry is very much in the position of a "killjoy" for no purpose whatever.

1.24 a.m.

Mr. Michael Foot: I intervene to support the case put by the hon. Member for Somerset, North (Mr. Leather), because I received today a telegram from the Chairman of the Labour Party in the area in which he appealed to me to support this plea and make it clear that there is certainly no party issue involved in it, as everyone in the area is agreed in supporting this case.
The hon. Member has made a powerful case, and I will wait with interest to hear the Minister's reply. All hon. Members who have dealt with similar cases must have felt that, under both Governments, there have been cases in which the rule about capital investment has sometimes been applied without any real understanding of the issues at stake.
Many hon. Members, after going into the details of these cases, have believed that there is strong ground for a greater spirit of relaxation and humanity in applying these rules, which we know have to be applied in the general case, for reasons which are well understood. Therefore, I support the case put by the hon. Gentleman opposite, and I hope that the Minister will relax his present rule

1.25 a.m.

Mr. John Peyton: I am grateful to my hon. Friend, the Member for Somerset, North (Mr. Leather) for bringing before the House the case which he raised, because he has given me an opportunity to support a similar application which has been made for the Yeovil Football Club. I should like to adapt to this case the arguments put forward by my hon. Friend. Yeovil, it is true, is a larger town. It is an industrial constituency in which there is an extremely popular, and sometimes very successful, football club. It enjoys widespread support. The ground, which accommodates some 14,000 people, at the moment has only inadequate shelter.
Perfectly legally, and within its rights, the club obtained a second-hand prefabricated shelter for the terracing on the top-side of the ground. The materials of this shelter are on the site. Only a permit for erection of the shelter is needed, and that is being withheld. I want to ask the hon. Gentleman whether this case is being looked at on its merits, individually, or is it being judged according to the ever-growing dogma of physical control. If it is being judged on its merits surely the hon. Gentleman must conclude that under the present decision there is no gain to the nation, and that there is loss to the club and the greatest inconvenience to its supporters. If the case is being judged merely in the light of the dogma of physical control, I think the decision is to be deplored.
I do not want to take up the time of the House at this late hour by speaking at great length, but I want to put to the hon. Gentleman, with all the force that I can, that there ought not to be an unreasonable withholding of a permit in such a case as this. A permit which, in this case, is not a very great matter, would make a considerable difference, not only to the club, on whose behalf I am putting this case to the House, but


to the very large numbers of regular supporters of the club who so often have to endure the miseries of wet West Country afternoons, or, alternatively, have to stay away from a match and miss what may be a very essential part of their week-end recreation.
I ask my hon. Friend to answer the question which I put to him. Is he judging this case, and that which was brought forward by my hon. Friend the Member for Somerset, North, on merits, or is he being forced to say "No" merely to support the unreasonable and tyrannical dogma which has become largely out-moded over the years?

1.30 a.m.

The Parliamentary Secretary to the Ministry of Works (Mr. Hugh Molson): No one, I think, likes the system of licensing which has been applied in this country ever since the war, least of all those who are responsible for administering it and who constantly find themselves obliged to reject applications which many considerations of humanity and reasonable sympathy would make them wish to concede. At the same time, it is necessary that the licensing administration in building and in all other matters should be conducted according to certain principles and certain rules.
I can think of nothing more tyrannical or abitrary than that the Minister or the civil servants responsible for these matters should just consider each case according to the appeal that has been made, its attractiveness, the powers of persuasion of the applicant, or the eloquence of the Member for that particular constituency. Therefore, these matters which have been raised tonight have been decided in accordance with the rules laid down.
My hon. Friend the Member for Somerset, North (Mr. Leather) began by saying that this was such a very small matter that it could not affect the general policy of the Government. He did, however, admit that he was seeking to raise a general principle that affected us all, and the fact that when he had raised this matter my hon. Friend the Member for Yeovil (Mr. Peyton) found that his constituency also has a similar application for a rather larger sum of money merely illustrates what is very well known

to the Ministry of Works that once the principle is conceded it is very difficult to know where it will stop.
There would be applications from a very large number of football clubs throughout the country, and how would it be possible to draw a distinction between football clubs and any other kind of athletic recreation? Once we arrived at the point of athletic recreation, how could we draw a line between football and horse-racing? We should then find ourselves involved in the whole of the recreations, pastimes and amenities of the people of this country.
The purpose of licensing is to keep the amount of building which is undertaken within the scope of what can be completed with the labour force available and the materials which are to hand. Under this licensing system we give priority to exports and to housing and defence, and each sector of the national life has accorded to it a certain proportion of the national resources which are available, and this we find most simply expressed in money. Money is the readiest way in which to estimate the amount of the national wealth, whether of materials or labour, which is to he used for any particular purpose. We have, therefore, allocated to these different activities, to the different Departments of State, to the different regions in the country, a certain financial allocation or ceiling, and we leave it to them to decide how much of their allocation is to be accorded to some particular purpose.
I see the right hon. Gentleman for South Shields (Mr. Ede) opposite. He was the Home Secretary in the last Parliament. The Home Office, for example, has its allocation and the Home Secretary makes an allocation as between prisons and fire stations and all the other things for which he is responsible. It is for the Ministry of Works to consider the applications which are made and which deal with matters like cinemas, theatres, race-courses, and recreations of different kinds. We can only carry out these principles if we work in accordance with the general rules which have been laid down.
There are, at present, more than 470 cinemas which are out of action in this country, some of them only requiring a


comparatively small expenditure of money to bring them back into action. At present, acting under the general policy laid down by the last Chancellor of the Exchequer, no cinema is being brought back into action which involves any large expenditure of money.
These are the general principles which apply. It is not possible for us to say that, because there is some particular small village, with a need for a football stand to be erected, that we can depart from the general principles of according priorities. My hon. Friend the Member for Somerset, North, suggested that, in effect, this was so small a matter that we could afford to make concessions. I hope he will realise that is an argument which cannot be allowed to apply.
He then suggested that because the building materials were already available in that case, a licence should be granted. If once we admitted that the availability upon the spot of building materials should be an argument in favour of granting a licence, it would very soon come about that all the materials necessary for particular buildings, which had a great deal of money behind them, would be very readily available upon the spot.
There are only two building materials which, at present, are subject to control. Therefore, it would be possible for

people willing to pay the necessary price to obtain the building materials, if that was a reason for granting the licence when it was available. Steel is at present subject to an allocation system and it would still be imposing a strain upon the working of this system if it meant that were steel made available by the black-market a licence could afterwards be obtained.
My right hon. Friend will have to introduce an Order, within the next six weeks, dealing with the whole question of licensing. The whole matter is, therefore, under review and it may be the Government will find it possible to make some relaxations, which will make the general licensing system in the future less onerous than it has been. But it would not, I am sure, be right for me tonight to hold out any expectation of concessions being made in the case of these particular football grounds, because it would be a concession which is not in accordance with the general principles upon which licensing has been applied under the last Government and is still administered under the present Government.

Question put, and agreed to.

Adjourned accordingly at Twenty-one Minutes to Two o'Clock a.m., Tuesday, 20th May.